Gutsen Communications Inc The Partial Direct Labor Financial Productivity Ratio for 2019 Is

question 62

Multiple Choice

Gutsen Communications Inc. manufactures a scrambling device for cellular phones. The main component of the scrambling device is a very delicate part—DTV-12. DTV-12 requires careful handlings during manufacturing. Once damaged, the part must be discarded. Only skilled laborers are hired to manufacture and install DTV-12. Damages still occur, however. The following are the operating data of Gutsen Communications Inc. for 2018 and 2019 relative to the insertion of DTV-12. Round calculations to 2 significant digits. $\begin{array}{lrr} & {2018} &{2019} \\\text { Number of phones manufactured } & 600,000 & 780,000 \\\text { Units of DTV-12 used } & 960,000 & 1,072,500 \\\text { Direct labor hours for DTV-12 insertion } & 1,800 & 2,600 \\\text { Total cost of DTV-12 units } & \$ 1,443,750 & \$ 2,333,750\\\text { Direct labor wage rate per hour }&\$67&\$82\end{array}$ The partial direct labor financial productivity ratio for 2019 is:

• A) 0.33.
• B) 0.42.
• C) 2.35.
• D) 3.66.
• E) 4.98.

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Definitions:

Overhead

All indirect costs of running a business that are not directly associated with the production of goods or services, such as rent, utilities, and administrative salaries.

Direct Labor

The wages and benefits paid to employees who directly manufacture or produce the products of a company.

Labor Costs

The total expenses that a company incurs due to the employment of staff, including wages, benefits, and taxes.

Predetermined Overhead Rate

An estimated charge per unit of activity used to allocate overhead costs to products or services, calculated before the accounting period begins.