Question
It is 20X5 and you are evaluating an offer of $23,500 each for five gas-powered generators. Through market research, you found the Motors and Generators
It is 20X5 and you are evaluating an offer of $23,500 each for five gas-powered generators. Through market research, you found the "Motors and Generators" index used by Government and Industry analysts for purchasing generators. Your customer informed you that the last unit price paid in 20X0 for the same gas-powered generators was $21,200. That purchase was also for five generators, with similar performance and contract terms. Given this information and assuming no other variables apply in this situation, use price indexing to determine if the proposed price of $23,500 appears reasonable.
| YEAR | MOTORS/GENERATORS INDEX |
| 20X0 | 100.0 |
| 20X1 | 103.3 |
| 20X2 | 106.0 |
| 20X3 | 110.8 |
| 20X4 | 113.0 |
| 20X5 | 111.9 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
First we need to calculate the price index for the year 20X5 compared to 20X0 Price index 20X5 Price ...
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Step: 2
Step: 3
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Advanced Accounting
Authors: Gail Fayerman
1st Canadian Edition
9781118774113, 1118774116, 111803791X, 978-1118037911
