A Company Is Setting Its Direct Materials and Direct Labor

question 59

Multiple Choice

A company is setting its direct materials and direct labor standards for its leading product.Direct materials cost from the supplier are $9 per square foot,net of purchase discount.Freight-in amounts to $0.40 per square foot.Basic wages of the assembly line personnel are $14 per hour.Payroll taxes are approximately 21% of wages.Benefits amount to $2 per hour.How much is the direct materials cost standard per square foot?

• A) $9.40
• B) $9.00
• C) $16.00
• D) $25.00

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Definitions:

Forward Rate

An agreed-upon interest rate for a financial transaction that will occur in the future, used in forward contracts and rate agreements.

Zero-coupon Bond

A bond that does not pay periodic interest and is sold at a discount from face value; its return comes from the difference between the purchase price and the face value paid at maturity.

Yield

The income return on an investment, such as the interest or dividends received, usually expressed as an annual percentage based on the investment's cost, its current market value, or its face value.

Zero-coupon Bond

A debt security that does not pay interest (coupon) but is traded at a deep discount, providing profit at maturity when the bond is redeemed for its face value.