The number of items produced and the price per item for the Duffy Manufacturing Company are as follows. What is the value index of production for 2006 using 1990 as the base period?
A)115.2
B)72.9
C)110.6
D)127.1

Question

The number of items produced and the price per item for the Duffy Manufacturing Company are as follows.  What is the value index of production for 2006 using 1990 as the base period?
A)115.2 
B)72.9 
C)110.6 
D)127.1

Quizplus · Accepted Answer

To calculate the value index of production for 2006 using 1990 as the base period, we need to use the following formula:
Value Index = (Current Year Production x Base Year Price) / (Base Year Production x Base Year Price) x 100

For 1990 as the base year, the base year production is 100 and the base year price is $10. Therefore, the value index for the base year will be 100.

For 2006, the current year production is 130 and the current year price is $18. Using the formula, we get:
Value Index = (130 x 10) / (100 x 18) x 100
Value Index = 127.1

Therefore, the answer is D, 127.1.

The Number of Items Produced and the Price Per Item