Final answer:
The cost of compensating employees who transform direct material into finished product is calculated by multiplying the amount of each input by the associated factor payment and summing them up.
Step-by-step explanation:
The subject of this question is Business and the grade level is College.
When calculating the cost of compensating employees who transform direct material into finished product, we need to consider the amount of direct material used, the associated factor payment (wages and salaries), and the quantity of output.
The cost of production for a given quantity of output is calculated by multiplying the amount of each input by the associated factor payment and summing them up.