Labor Costs That Are Clearly Associated with Specific Units or Batches

question 158

Multiple Choice

Labor costs that are clearly associated with specific units or batches of product because the labor is used to convert raw materials into finished products called are:

• A) Sunk labor
• B) Direct labor
• C) Indirect labor
• D) Finished labor
• E) Supervisory labor

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Definitions:

Acid-Test Ratio

A stringent indicator that measures a company's ability to cover its short-term liabilities with its most liquid assets, excluding inventory.

Current Ratio

A liquidity ratio that measures a company's ability to cover its short-term obligations with its current assets.

Gross Margin Percentage

A financial metric that measures the difference between revenue and the cost of goods sold, divided by revenue, expressed as a percentage; it shows the proportion of money available to cover other expenses and profit.

Return On Total Assets

A financial ratio that measures the profitability of a company relative to its total assets, indicating how effectively a company is using its assets to generate earnings.