Question

R&B Beverages, Inc., provides a complete line of beer, wine, and soft drink products for distribution through retail outlets in central Iowa. Unit price data for 2011 and 2014 and quantities sold in cases for 2011 follow. Item 2011 quantity (cases) Unit price 2011 2014 Beer 35,000 17.50 20.15 Wine 5,000 100.00 118.00 Soft drink 60,000 8.00 8.80 Compute a weighted aggregate index for the R&B Beverage Sales in 2014, with 2011 as the base period.

Answer 1

SOLUTION:

From given data,

R&B Beverages, Inc., provides a complete line of beer, wine, and soft drink products for distribution through retail outlets in central Iowa. Unit price data for 2011 and 2014 and quantities sold in cases for 2011 follow.

The given information is shown in below.

2011 Quantity Unit Price ($)

Item	2011 Quality (cases)	2011	2014
Beer	35,000	17.50	20.15
Wine	5,000	100.00	118.00
Soft drink	60,000	8.00	8.80

We need to compute a weighted aggregate price index for the R & B Beverage sales in 2014 , with 2011 as the base period .

By definition using a weighted aggregate price index in period t,

= ( / ​ ) 100

Where,

​​​​​​ = unit price for item i in period t

= unit price for item i in the base period

= quantity of usage for the item i

The weighted aggregate price index for the component part in the year 2014

=

[20.15 (35,000)+ 118.00 (5,000)+8.80(60,000) /17.50 (35,000)+ 100.00 (5,000)+8.00(60,000)] * 100

= [ 1823250 / 1592500 ] * 100

= 1.1448979*100

= 114.48979

  114

Therefore , the weighted aggregated price index for the R&B Beverage sales in 2014 is $114