US Best Corporation produces and distributes products nationwide, and competes on cost leadership. In order to maintain its current industry cost and price leadership role, US Best uses cost-based pricing techniques. One of the factors considered in determining future prices is the Consumer Price Index (CPI). Considerable discussion over the past few years on the national level has strongly suggested the monthly CPI inflation adjustment figure is skewed upward by as much as one percentage point.
Required:
What implication does this purported inflation exaggeration in the Consumer Price Index have on US Best Corporation's cost-based pricing changes in the near future?

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The Answer of US Best Corporation produces and distributes products nationwide, and competes on cost leadership. In order to maintain its current industry cost and price leadership role, US Best uses cost-based pricing techniques. One of the factors considered in determining future prices is the Consumer Price Index (CPI). Considerable discussion over the past few years on the national level has strongly suggested the monthly CPI inflation adjustment figure is skewed upward by as much as one percentage point.
Required:
What implication does this purported inflation exaggeration in the Consumer Price Index have on US Best Corporation's cost-based pricing changes in the near future?

US Best Corporation Produces and Distributes Products Nationwide, and Competes