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Suppose a business executive was earning rs.2050 in the base period what should be his salary in the current period if his standard of living is to remain the same? Given IW=3544 W=25?
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Suppose a business executive was earning rs.2050 in the base period wh...
Calculating Salary in Current Period


Understanding the Given Information



  • Base Period Salary (BPS) = Rs. 2050

  • Index Number of the Base Period (IB) = 100

  • Index Number of the Current Period (IC) = 3544

  • Conversion Factor (CF) = IC/IB = 3544/100 = 35.44

  • Wage Rate (W) = 25



Calculating Salary in Current Period


The salary in the current period can be calculated using the following formula:


Salary in Current Period (CPS) = BPS x (CF/W)


Substituting the values in the above formula:


CPS = 2050 x (35.44/25) = 2896.32


Therefore, the executive's salary in the current period should be Rs. 2896.32 if his standard of living is to remain the same.


Explanation


The given information provides the base period salary, index numbers of the base period and current period, and the wage rate. Using this information, we can calculate the conversion factor which indicates the change in the cost of living from the base period to the current period. The wage rate represents the average earnings of workers in the current period. Using the conversion factor and wage rate, we can calculate the salary in the current period that is equivalent to the base period salary in terms of purchasing power. This allows us to compare the standard of living of the executive in the base period and the current period.
Community Answer
Suppose a business executive was earning rs.2050 in the base period wh...
Cpi =IW/w
=3544/25
141.76
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Suppose a business executive was earning rs.2050 in the base period what should be his salary in the current period if his standard of living is to remain the same? Given IW=3544 W=25?
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Suppose a business executive was earning rs.2050 in the base period what should be his salary in the current period if his standard of living is to remain the same? Given IW=3544 W=25? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Suppose a business executive was earning rs.2050 in the base period what should be his salary in the current period if his standard of living is to remain the same? Given IW=3544 W=25? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Suppose a business executive was earning rs.2050 in the base period what should be his salary in the current period if his standard of living is to remain the same? Given IW=3544 W=25?.
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