Let AR = Actual Hourly Rate for Direct Labor, SR

question 159

Multiple Choice

Let AR = actual hourly rate for direct labor, SR = the standard hourly rate, AH = the actual direct labor hours used, and SH = the standard direct labor hours for a given level of production. The direct labor rate variance equals

• A) SR × (AH - SH)
• B) AR × (AH - SH)
• C) AH × (AR - SR)
• D) SH × (AR - SR)

Understand the concept and calculation of Days Sales Outstanding (DSO) and its relation to firm's credit and collection policies.

Grasp the economic order quantity (EOQ) model and its relevance in inventory management.

Comprehend the effects of changes in credit policy on sales, receivables, and profitability.

Recognize the role and impact of collection policies on a firm's financial health.

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Definitions:

Bond Issuer

An entity, such as a corporation or government, that issues bonds to raise funds from investors.

Bondholder

An investor who owns bonds issued by corporations or governments, thereby lending money to the issuer in return for periodic interest payments and the return of principal at maturity.

Annual Coupon Rate

The interest rate a bond pays its holder, expressed as a percentage of its face value and payable annually.

Bond

A fixed-income instrument that represents a loan made by an investor to a borrower, typically corporate or governmental, which includes terms regarding the interest rate and when the loaned funds (bond principal) must be paid back (maturity).