Question

Labor data for making one gallon of finished product in Bing Company are as follows. (1) Price—hourly wage rate $14.00, payroll taxes $0.80, and fringe benefits $1.20. (2) Quantity—actual production time 1.10 hours, rest periods and cleanup 0.25 hours, and setup and downtime 0.15 hours.

Compute the following. (Round answers to 2 decimal places, e.g. 1.25.)

(a)		Standard direct labor rate per hour.		$enter a dollar amount rounded to 2 decimal places
(b)		Standard direct labor hours per gallon.		enter a number of hours rounded to 2 decimal places	hours
(c)		Standard labor cost per gallon.		$enter a dollar amount rounded to 2 decimal places

Answer 1

Solution :

(a) Standard direct labor rate per hour = $ 16.00

(b) Standard direct labor hours per gallon = 1.50 Hours

(c) Standard labor cost per gallon   = $ 24.00  

Working :

(a) Standard direct labor rate per hour = Wages Rate + Payroll Taxes + Fringe Benefits

= $ 14.00 + $ 0.80 + $ 1.20

= $ 16.00

(b) Standard direct labor hours per gallon = Production Time + Rest Period and Clean up + Set up and down time

= 1.10 Hour + 0.25 Hour + 0.15 Hour

= 1.50 Hours

(c) Standard labor cost per gallon = Standard Direct Labor Hour per gallon * Standard Labor Hour Rate

= 1.50 * $ 16

= $ 24.00 per Galon

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