Kramerica Industries is a AAA-rated company that needs to fund a project with an estimated life of 10 years. It can borrow at a fixed rate of 8.75% or it can borrow at a floating rate of 3-month LIBOR. Vandelay Industries is a BBB-rated company that also needs to borrow for 10 years. It can borrow at a fixed rate of 10.50% or it can borrow at a floating rate of3-month LIBOR + .25%. Produce a swap quote that reduces the borrowing costs of both Kramerica and Vandelay Industries, and makes a spread for the swap bank, Super Terrific National Bank.Show how much each company saves and how much is made by STNB

Answer:

C) product sampling

Explanation:

Product Sampling is the technique of marketing the product, by providing a small sample of the product for free, so that the customer uses the product and satisfy themselves.

This is one of the most expensive methods of marketing the product, as distributing the product for free, would cost the company, but as this proves the quality of the product, it creates belief among the consumers and customers.

Distribution of free razors is a product sampling method.

The movement of funds away from Country X leads to a shift in the supply and demand curves for its currency in the foreign exchange markets, increasing supply and decreasing demand. This shift results in the depreciation of Country X's currency.

When investors in international finance move funds from Country X to other countries, this behavior influences the foreign exchange markets. As there is a depreciation of Country X's currency, a negative sentiment is cultivated among investors, leading to a further decline in demand for the currency. Consequently, the demand curve for Country X's currency will shift to the left (a decrease in demand) on the foreign exchange market graphs.

At the same time, an increase in the supply of Country X's currency will occur because investors are selling it off. This action shifts the supply curve to the right (an increase in supply). Since the supply of the currency is rising while the demand for it is falling, there will be a downward pressure on the currency's value, causing it to depreciate relative to other currencies.

Ein consequence of this depreciation may be that the rate of return on foreign assets decreases. If investors anticipated the depreciation and adjusted their expectations, they might find their investments less attractive, thus further reducing the demand for the depreciating currency. This is a detrimental cycle that can lead to a persistent decline in the currency's value, prompting capital flight and potential economic instability within Country X.

Answer:

The question is based on the economics theory named the game theory. Economists frequently use it to analyze the outcomes for adversary firms.

Explanation:

To solve this problem we need to pay attention to the best outcome for each firm given the choices of the other firm. So, when Pictech chooses a higher price, Flashfone should choose between a high or low price. The firms must keep choosing until they run out of options.

To have a dominant strategy, the firms should always choose a low price.

Based on the game theory:

If Flashfone prices high, Pictech will make more profit if it chooses a (high,low) __low___ price, and if Flashfone prices low, Pictech will make more profit if it chooses a(high,low)____low___ price.

If Pictech prices high, Flashfone will make more profit if it chooses a(high,low)_____low_price, and if Pictech prices low, Flashfone will make more profit if it chooses a (high,low) ___low___ price.

Considering all of the information given, pricing high (is, is not) __is not____ a dominant strategy for both Flashfone and Pictech.

They will end up choosing the low price strategy. Both Flashfone and Pictech will choose a low price.

The answer is true, because the prisioner's dilema is a game were both parties know that the outcome can be worse for both. So they rather play in a way that is better for their interests. In the firms' case, they could have choose higher prices, but  they didn't because each of them intented to charge a lower price and outsell the other firm. Meaning that, the one with the lower price, would sell more smartphones.

Answer:

controllable margin =  $100,000

Explanation:

given data

Income tax expense =  $62000

Contribution margin =  180000

fixed costs =  80000

Interest expense = 68000

Total operating assets = 40000

to find out

How much is controllable margin

solution

we get here controllable margin that is express as

controllable margin = contribution - controllable fixed cost      ....................1

put here value we get

controllable margin = 180000 - 80000

controllable margin =  $100,000

The controllable margin for Bramble Corp. for the year 2016 is calculated by deducting the controllable fixed costs from the contribution margin. Upon calculation, it comes out to be $100,000, which measures the efficiency of the company.

The controllable margin for Bramble Corp. can be calculated using the formula: Controllable Margin = Contribution Margin - Controllable Fixed Costs. The contribution margin is the difference between the company's total sales and its total variable costs. The controllable fixed costs are the overhead expenses that management has control over and can alter.

So, in the case of Bramble Corp., their contribution margin for 2016 was $180,000, and their controllable fixed costs were $80,000. Therefore, we subtract the controllable fixed costs from the contribution margin:

Controllable Margin = $180,000 - $80,000 = $100,000

Therefore, the controllable margin for Bramble Corp. for the year 2016 was $100,000. This depicts the profitability of the company after accounting for both variable and controllable fixed costs and it is one of the vital metrics to measure the efficiency of a company.

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Answer:

Letter B is correct. Performance of analytical procedures.

Explanation:

The effectiveness of internal control in an organization occurs when the procedures and policies developed by managers are maintained to protect assets through an expected degree of confidence.

Performance of analytical procedures are used as a risk assessment instrument, ie they are used near the end of each audit to assist and direct the auditor in determining conclusions about the financial statements.

Answer:

In year 1 the warranty expense reported is $450 ($9,000 x 5%)

Explanation:

The journal entries would be:

Sales journal entry - August 16 - Year 1

Account                          Debit             Credit

Cash                                $9,000

Cost of goods sold         $4,500

Revenue                                               $9,000

Inventory                                              $4,500

Accrued Warranty Expense - December 31 - Year 1

Account                         Debit               Credit

Warranty Expense        $450

Estimated Warranty

Liability                                                    $450

By the end of Year 1, the company has recognized an accrued expense (an accrued expense is recognized before cash is actually paid out) for $450.

Answer:

D) 2.50%

Explanation:

The arithmetic average return is simply the mean of all given return rates. There are four return rates and their values are, 10%, 15%, 15%, and -30%

[tex]AAR = \frac{10+15 +15-10}{4}\\AAR= 2.5\%[/tex]

S&P 500 index delivered an arithmetic average annual return of 2.5% for four years

The arithmetic average annual return for four years is 10%.

To calculate the arithmetic average annual return for four years, you need to find the average of the annual returns. The annual returns given are 10%, 15%, 15%, and -30%. To find the average, you add up all the returns and divide by the number of returns.

(10% + 15% + 15% + (-30%)) / 4 = 10%

The arithmetic average annual return for four years is 10%.

To calculate the present value of car ownership benefits, we use the rental savings and future sale value, adjusted for a 6% interest rate. If the total present value is less than the cost of buying the car, it is financially advisable to purchase the car.

Part 1: Present Value of Car Ownership Benefits

To calculate the present value (PV) of the benefits of owning the car, we need to consider the savings on rental expenses and the future sale of the car. We have annual rental expenses of $2,200 and a future sale value of $5,000 after 10 years. Using the given interest rate of 6%, the formula for the present value of an annuity can be used to find the present value of the rental savings, and the formula for the present value of a lump sum can be used for the sale price of the car.

The formula for the present value of an annuity is PV = PMT * [(1 - (1 + r)^-n) / r], where PMT is the annual payment, r is the interest rate, and n is the number of periods. In this case, PMT = $2,200, r = 0.06, and n = 10. The present value of the car's resale value is calculated using the formula PV = FV / (1 + r)^n, where FV is the future value.

Part 2: Should You Buy the Car?

To determine if the student should buy the car, we compare the present value of buying and owning the car to the present value of continuing to rent. If the present value of ownership is less than or equal to the present value of renting, then buying the car is a financially sound decision. Based on the calculation from Part 1, if the PV of ownership is less than $23,000, then the main answer would be yes, they should buy the car.

Answer:

1.97 times

Explanation:

The formula to compute the current ratio is shown below:

Current ratio = Total Current assets ÷ total current liabilities

Current ratio before any adjustment is shown below:

So, current ratio = $343,980 ÷ 196,600 = 1.75 times

Current ratio after  adjustments are shown below:

Current assets = Before adjustment balance + goods purchased costing - physical count of inventory + freight-in charges

= $343,980 + $20,440 - 11,890 + 3,040

= $355,570

Current liabilities = Before adjustment balance - goods not received

                            = $196,600 - $15,950

                            = $180,650

So, the current ratio would be

= $355,570 ÷ $180,650

= 1.97 times

Final answer:

After adjusting for incorrectly recorded items involving inventory and freight-in costs, the corrected current ratio for Sharon Lee Corporation is 1.81:1.

Explanation:

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year. It is calculated by dividing current assets by current liabilities. Initially, Sharon Lee Corporation’s current ratio is calculated as $343,980 (current assets) divided by $196,600 (current liabilities), which is 1.75:1. However, several items have been recorded incorrectly and this will affect the current ratio after adjustments.

After correcting these items, the adjusted current assets would be:

$343,980 - $11,890 (consignment goods) + $20,440 (f.o.b. shipping point goods) + $3,040 (freight-in) = $355,570.

The current liabilities remain unchanged at $196,600. Thus, the corrected current ratio is $355,570 divided by $196,600, which is 1.81:1 when rounded to two decimal places.

Answer:

Taxable income = $ 197500

Total liability = $ 47650

Explanation:

Please see attachment

Sole proprietorship is known to be as the enterprise which is basically owned by a given one natural person and Lily taxable income is given as $160,500.

The Accumulated depreciation is known to be as the depreciation which is the total value of a given asset actually been Depreciated into a single point which is recorded in the Contra asset account side.

Hence the Lily taxable income is $227500 and the taxable liability is $51225 The image to the Lily Taxable income and Tax liability is attached below.

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Answer:

This question has a missing information. I have found the complete version and pasted it down below;

"Your neighbor offers you an investment opportunity, which will pay a single lump sum of S2,000 five years from today. The investment requires a single payment of $1,500 today. The return on the investment is % A. 4.195 B. 4.729 C. 5.361 D. 5.922 E. 6.961 "

Explanation:

This question requires you to find that discount rate given a single future cashflow. $2,000 is expected 5 years from today, hence the future value. $1,500 payment today is the dollar value today, hence the Present value.

Using a financial calculator, you will key in the following inputs;

Total duration; N = 5

Present value; PV = -1,500 (it's a cash outflow hence negative)

Recurring payment; PMT = 0

Future value; FV = 2,000

then find the rate by keying in CPT I/Y = 5.922%

Therefore, the return on the investment is 5.92%

Final answer:

Stocks have the potential for higher average returns over time compared to bonds and savings accounts. The return on the investment is D. 5.922

Explanation:

The question is asking which investment (stocks, bonds, or a savings account) has a higher average return over time. Each investment option has its own level of risk and potential return.  

Using a financial calculator, you will key in the following inputs;

Total duration; N = 5

Present value; PV = -1,500 (it's a cash outflow hence negative)

Recurring payment; PMT = 0

Future value; FV = 2,000

then find the rate by keying in CPT I/Y = 5.922%

Therefore, the return on the investment is 5.92%

Answer:

The marginal revenue product has a property known as diminishing marginal return.

The property of diminishing marginal return tells us that theres an amount of input that maximizes revenue, and after this point is reached, additional units of input less addional revenue until diminishing it.

In this example, the Collection Agency is way past the maximum revenue point (located at $34.00 per worker). It needs to lay off employees until it goes from the current $40.00 marginal revenue product, until $34.00 marginal revenue product.

Answer:

It tells us that agriculture is a politically-sensitive sector, and agricultural protectionism is very common not only in the US, but also in the rest of the developed world.

In most trade agreements, countries add protections for specific primary sectors. The rationale is protect farmer's incomes and modes of living, but the economic reality is that these subsidies tend to produce either higher prices for consumers, or overproduction. In the US, for example, many analysts argue that corn subsidies are directly related with the high obesity levels in the country, because so much corn is produced that corn syrup is added to a wide variety of foods.

Answer:

(A) Chance

Explanation:

Please see attachment .

Selling $8 million worth of bonds by the Fed results in a decrease in bank reserves and money supply, with a maximal possible decrease of $40 million in the money supply if the reserve requirement is 20%.

When the Fed sells bonds, it reduces the amount of reserves that banks hold. If the Fed sells $8 million worth of bonds, the bank reserves decrease by that same amount because banks exchange their reserve balances for the bonds. Consequently, as reserves decrease, the money supply also decreases. This is because banks have less money to loan out, which reduces the total amount of money in circulation.

If the required reserve ratio is 0.2 (or 20%), the maximum possible change in the money supply can be found using the money multiplier formula, which is the reciprocal of the reserve requirement. The maximum change in the money supply is 1/0.2 times the change in reserves, so in this case, it is 5 times $8 million, which equals $40 million.

When the Fed sells bonds, bank reserves and the money supply decrease. The maximum reduction in the money supply can be calculated using the required reserve ratio.

Bank reserves change by the same amount as the bonds sold by the Fed. When the Fed sells $8 million worth of bonds, bank reserves decrease by $8 million.

The money supply will decrease when the Fed sells bonds, as selling bonds reduces the money available in the economy.

The maximum possible change in the money supply, if the required reserve ratio is 0.2, can be calculated by dividing the change in reserves by the reserve ratio. In this case, if the Fed sells $8 million worth of bonds, the maximum reduction in the money supply would be $8 million ÷ 0.2 = $40 million.

Answer: (D) Ongoing customer relationships with the company

Explanation:

 In an organization, the ongoing customer relationship are important as they help in improve the business relation of the company.

They manage all the process of interaction with the customers for improving the productivity and also improve the profitability of the company.

 The customer satisfaction is one of the main factor for the organization in the customer relation management process. Today, the marketers are moving ahead by manage the communication of the customer relationship with the organization or company.  

Therefore, Option (D) is correct.  

Answer

Profit of Amy = (229)(90) - 9(90)

=20610  - 360

=20250

Profit of Sonia (229)(95) - 4(45)

=1035-180

=10125

The answer and procedures of the exercise are attached in the following images.

Explanation  

Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in the following images.

Answer:

$36.012

Explanation:

Data provided in the question:

ROE = 21%

Plowback ratio, b = 0.40

Earnings, E1 = $2.0 per share

Required rate of return on the stock, r = 13%

Now,

Growth rate, g = ROE × b

= 21% × 0.40

= 8.4%

D1 = E1 × (1-b)

= $2.0 × ( 1 - 0.40 )

= $1.2

[tex]V0^{Growth}[/tex] = [tex]\frac{D1}{(r - g)}[/tex]

= [tex]\frac{\$1.2}{(0.13 - 0.084)}[/tex]

= $26.087

V4 = [tex]\frac{D5}{(r - g)}[/tex]

= [tex]\frac{D1\times(1 + g)^4}{(r - g)}[/tex]

= V0 × (1 + g)⁴

= $26.087 × (1 + 0.084)⁴

= 36.019 ≈ $36.012

To maximize profit in this scenario, the optimal pricing strategy for your company is to quote a low price and supply the full 100,000 windshields, earning a profit of $11 million.

To determine the optimal pricing strategy in this scenario, you need to analyze the potential outcomes for each pricing decision. If both you and your rival submit a low price, each firm supplies 50,000 front and rear windshields and earns no profit, so this is not an attractive option. If you quote a low price and your rival quotes a high price, you will supply 100,000 windshields and earn a profit of $11 million, while your rival will lose $2 million.

If both firms quote a high price, each firm supplies 50,000 windshields and earns a profit of $6 million. Based on these outcomes, the optimal pricing strategy for your company would be to quote a low price in order to supply the full 100,000 windshields and earn a profit of $11 million. This strategy assumes that your rival will quote a high price.

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Answer:

B. 459.3 million

Explanation:

FCF5 = $26 million * (1 + 0.06) = 27.6 million

and to continue

V4 = $27.6 million / (0.12 - 0.06) = 459.3 million

The terminal enterprise value cannot be accurately calculated with the provided data because the free cash flow in the final projected year is missing, which is critical for calculating the terminal value in the Gordon Growth Model.

The student is asking for the expected terminal enterprise value of Conundrum Mining. First, we calculate the present value of the free cash flows using the given discount rate of 12%. Given the free cash flows are $15 million, $20 million, and $25 million for the present, first, and second year respectively, we discount these by the weighted average cost of capital. The present values then become: $15 million, $20 million/(1+0.12) = $17.86 million, and $25 million/(1+0.12)² = $19.88 million. This gives a total present value of $52.74 million.

Next, we calculate the terminal value which is the present value of all future cash flows growing at a constant rate. This can be calculated using the formula: Terminal Value = (Cash Flow in Final Year * (1 + growth rate)) / (discount rate - growth rate). However, an important piece of information, the free cash flow in the last projected year, is missing in the question. Therefore, it's impossible to accurately calculate the terminal enterprise value with the provided data.

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Answer:

The "Kareem" realized loss on the exchange is $8000.

Explanation:

The adjusted basis is = $22000

"Fair market value" is = $14000

"Kareem" exchanges the truck for another truck = worth $14000

"Realized gain" or "Realized loss = basis in the truck - exchange value

Realized gain or loss = $22000 - $14000

Realized gain or loss = $8000

Kareem's loss on the exchange is $8000.

There is no "recognized gain" or "recognized loss"  because the exchange is like a kind exchange which is not documented.

Answer:

$600,000

Explanation:

Data provided in the question:

Controllable margin = $66,000

Sales = $480,000

Return on investment = 10%

Now,

Return on investment  = Controllable Margin ÷ Average Operating Assets

or

10% = $60,000 ÷ Average Operating Assets

or

Average Operating Assets = 60000 ÷ 10%

or

Average Operating Assets = 60000 ÷ 0.01

or

Average Operating Assets = $600,000

Answer:

Mike spends $160,000 on A and $75,000 on B

Explanation:

Lets call the rental properties as A and B.

A yields 10% anb B yields 12%.

Total investment=$235,000

Expected income=$25,000

Let the amount he invests in A be x.

Then amount spent in B=$(235,000-x)

Income from A=x × 0.1                             ----------------(1)

Income from B=(235,000-x)× 0.12          ---------------(2)

Sum of incomes =$25,000

Taking sum of both equations,

x × 0.1 +(235,000-x)× 0.12 =25,000

235,000×0.12 -0.02×x =25,000

28,200 -0.02×x =25,000

0.02×x =3,200

x=[tex]\frac{3,200}{0.02}[/tex]

x =$160,000

Answer:E. a flexible price policy

Explanation:

The flexible price policy is a bargaining system between the buyer and seller to trade together at an agreed price.

The FOB seller factory price policy means where the ownership of the goods transferred to buyer, Robinson's act is only to prevent price discrimenation in the retail industry from the producers, a skimming price policy makes use of dual prices whithin a time interval, a status quo pricing objective is to maintain homogeneous price in the market among the sellers.

Answer:

Option (D) is correct.

Explanation:

Given that,

Standard direct labor cost per hour, SR = $19 per hour

Standard direct labor hours per t-shirt = 0.4 hours

Actual direct labor hours, AH = 680

Actual output = 1,400 t-shirts

Standard hours for actual output, SH:

= Standard direct labor hours per t-shirt × T-shirts produced

= 0.4 hours × 1,400

= 560

Therefore,

Direct labor efficiency variance for the month:

= (SH - AH) × SR

= (560 - 680) × $19

= $2,280 Unfavorable

The accounting entries for the issuance of bonds, semi-annual interest payments, and maturity of the bonds are outlined. They consist of debiting and crediting the Cash, Bonds Payable, and Interest Expense accounts accordingly.

The situations presented in this question relate to accounting for bond transactions. Below are the requested entries:

Please note that the interest payment recordings are repeated every six months until the bond maturity date when the Bonds Payable is cleared.

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The issuance of bonds is recorded as a debit to Cash and a credit to Bonds Payable. Semiannual interest payments are entered as a debit to Interest Expense and a credit to Cash. The maturity of the bonds is recorded as a debit to Bonds Payable and a credit to Cash.

1. Record the entry for the issuance of bonds for cash on January 1, 2019:
Debit Cash for $3,200,000 (Inflow of cash)
Credit Bonds Payable for $3,200,000 (Record the liability of the bonds)

2. Record the entry for the first semiannual interest payment on June 30 and the second semiannual interest payment on December 31:
Debit Interest Expense for $144,000 (9% of $3,200,000 / 2)
Credit Cash for $144,000.

Repeat the same entries for the second interest payment.

3. Record the entry for the maturity of the bonds on December 31, 2022 (assuming semiannual interest has already been recorded):
Debit Bonds Payable for $3,200,000
Credit Cash for $3,200,000.

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Answer:

budget sale revenue  = $2,069,760

Explanation:

given data

beginning inventory = 3000

sell  = 11000 units

sales = 12% increase

ending inventory = 25%

surfboard costs = $100

sold = $150

to find out

How much is budgeted sales revenue for the third quarter of 2016

solution

first we will get here budget sales unit for quarter 3 that is

budget sales unit = ( 11000 × 112% ) 112%

budget sales unit = $13798.4

and

selling price is here $150

so

budget sale revenue for 3rd quarter sale is = budget sales unit × selling price

budget sale revenue  = $13798.4 ×  $150

budget sale revenue  = $2,069,760

If Sheffield estimates it will sell 11000 units during the first quarter of 2016 with a 12% increase in sales each quarter. The amount of the budgeted sales revenue for the third quarter of 2016 is $2,069,760

First step is to estimate first quarter sales

Estimated first quarter sales= 11,000 units + (11,000 units x 12%)

Estimated first quarter sales=11,000 units +1,320 units

Estimated second quarter sales in units=12,320 units

Second  step is to estimate second quarter sales

Estimated second quarter sales= 12,320 units + (12,320 units x 12%)

Estimated second quarter sales= 12,320 units + 1,478.4 units

Estimated second quarter sales= 13,798.4 units

Third step is to calculate  how much is budgeted sales revenue for the third quarter of 2016 using this formula

Budgeted Sales for Third Quarter=Estimated second quarter sales × Selling price per unit

Let plug in the formula

Budgeted Sales for Third Quarter=13,798.4 units × $150

Budgeted Sales for Third Quarter=$2,069,760

Inconclusion if Sheffield estimates it will sell 11000 units during the first quarter of 2016 with a 12% increase in sales each quarter. The amount of the budgeted sales revenue for the third quarter of 2016 is $2,069,760

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Answer:

through advertisement about its product's notable features

offering a warranty that is more generous than most competitors

Explanation:

Product differentiation is basically aimed to make a product that is different from other products.

That the characteristics and features of the product are different from that are already present in the market.

Displaying notable features in the advertisement provides for product differentiation in the consumers.

Also providing extra warranty is a feature which will add to the product differentiation.

Final answer:

A firm can demonstrate product differentiation by advertising its product's notable features, using different pricing strategies, and offering a more generous warranty than competitors. These strategies make the product appear unique and enhance the perception of its value. Running a sale is not a typical method of differentiation, as it does not indicate the product is distinct, but rather offers a temporary price incentive.

Explanation:

The firm can demonstrate product differentiation by advertising the notable features of its product, pricing the product differently for different customers, and offering a more generous warranty than competitors. These approaches are designed to make the firm's product stand out in the marketplace and create a perception of uniqueness among consumers.

Advertising can help shape the intangible aspects of a product and influence consumer preferences by highlighting the unique features and benefits of the product. Offering a generous warranty is also an intangible aspect that not only adds value but also reinforces the product's quality and reliability, distinguishing it from competitors. Different pricing strategies can also signal to different customer segments that the firm's product has special qualities or offers unique value.

Furthermore, running a sale can often attract consumer attention and suggest a good deal, but it is not typically a method of product differentiation as it does not necessarily imply that the product is different; rather, it indicates a temporary price reduction. Therefore, running a sale is not as much about differentiation but more about pricing tactics to boost sales volume.

Answer:

The correct option is A that is federal funds rate

Explanation:

Federal funds rate is the rate of interest which is charged by the banks on other banks in order to lend or give them the money from the balance of reserve on an overnight ground . And in accordance with  the law, the banks need to preserve or keep a reserve, that is equal to a particular % (percentage) of the deposits in the account at a Federal Reserve bank.

The headline is likely to address the federal funds rate in the journal.

Answer:

Standard rate per direct labor hour is $27.1

Explanation:

Standard rate per direct labor hour includes the hourly pay rate, Payroll taxes and fringe benefits. For Theresa Corporation,

We have given that

Basic direct labor rate is $21.00 per hour

Payroll Taxes is 10% of basic direct labor rate i.e. 10% of $21.00 = $2.10 per hour

Fringe Benefits is $4.00 per hour.

So Standard rate per direct labor hour = $21.00 + $2.10 + $4.00 = $27.1