ExpertEasy2 marksMultiple Choice
ACCA · Question 07 · Data analysis and statistical techniques
Section A
Oceanic Freight, a cross-border shipping multinational, uses index numbers to analyze its fuel costs over the last decade.
What is the primary purpose of using index numbers in this context?
Section A
Oceanic Freight, a cross-border shipping multinational, uses index numbers to analyze its fuel costs over the last decade.
What is the primary purpose of using index numbers in this context?
Answer options:
A.
To calculate the exact volume of fuel consumed in liters.
B.
To measure the relative change in fuel prices over time compared to a base year.
C.
To eliminate the effect of fixed costs from the fuel budget.
D.
To predict the exact daily exchange rate fluctuations.
How to approach this question
Recall the definition of an index number in statistics. It compares a current value to a base value.
Full Answer
B.To measure the relative change in fuel prices over time compared to a base year.✓ Correct
An index number is a statistical measure designed to show changes in a variable or group of related variables with respect to time, geographic location, or other characteristics. In cost analysis, it is primarily used to measure relative changes in prices or quantities over time compared to a chosen base year.
Common mistakes
Confusing index numbers with forecasting tools like moving averages.
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