Smith Corporation Makes and Sells a Single Product Called a Pod

question 90

Multiple Choice

Smith Corporation makes and sells a single product called a Pod. Each Pod requires 1.4 direct labor-hours at $9.60 per direct labor-hour. The direct labor workforce is fully adjusted each month to the required workload. Smith Corporation is preparing a Direct Labor Budget for the second quarter of the year.The budgeted direct labor cost per Pod is closest to:

• A) $13.44
• B) $9.60
• C) $7.38
• D) $11.00

---

Definitions:

Interest Charged

The cost incurred for borrowing money or the amount earned on deposited funds, usually expressed as a percentage of the principal.

Contingent Liability

A potential financial obligation that may arise depending on the outcome of a future event.

Contingent Liabilities

Liabilities that may arise from past transactions if certain events occur in the future.

Interest Expense

The cost incurred by an entity for borrowed funds; interest expense is a non-operating expense shown on the income statement.