Zellner Corporation Is Developing Direct Labor Standards

question 32

Multiple Choice

Zellner Corporation is developing direct labor standards. A particular product requires 0.94 direct labor-hours per unit. The allowance for breaks and personal needs is 0.02 direct labor-hours per unit. The allowance for cleanup, machine downtime, and rejects is 0.10 direct labor-hours per unit. The standard direct labor-hours per unit should be:

• A) 0.82
• B) 0.92
• C) 0.94
• D) 1.06

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Definitions:

Mental Accounting

A concept within behavioral economics that refers to the way individuals categorize, separate, and evaluate financial activities, often leading to irrational decision-making.

Irrational Decisions

Choices made contrary to or without consideration of the available evidence or logic.

Anchoring

A cognitive bias where an individual relies too heavily on an initial piece of information (the "anchor") to make subsequent judgments.

Behavioral Economists

Researchers and experts who study the psychological, social, cognitive, and emotional factors influencing economic decisions and behaviors of individuals and institutions.