Using the Data Below, If Direct Materials Can Be Reduced

question 23

Essay

Using the data below, if direct materials can be reduced by 10% and direct labor by 5%, the improvement in profit would be: $\begin{array}{llcc}&& \text { Dollars }& \text { Percent of Sales}\\ \text { Revenue } &&\$1,000,000&100\%\\ \text { Cost of Goods Sold } &\\ \text {Direct Material } &\$500,000&&50\%\\ \text { Direct Labor} &\$200,000&&20\%\\ \text {Factory Overhead } &\$200,000&&20\%\\ \text {Total Cost of Goods } &&\underline{\$900,000}&90\%\\\text { Sold }\\ \text {Gross Profit } &&\$100,000&10\%\\\end{array}$

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Definitions:

Regression

A defense mechanism leading an individual to revert to an earlier stage of development in response to stress or conflict.

Immaturity

A lack of development, whether in biological, emotional, or psychological realms, often resulting in childlike behavior in adults.

Psychoanalytic Theory

A theory of personality organization and the dynamics of personality development that guides psychoanalysis, developed by Sigmund Freud, focusing on unconscious motives and conflicts.

Superego

The part of the personality in Freudian psychoanalysis that is responsible for upholding moral standards and ideals acquired from parents and society, often in conflict with individual desires.