Question

Crana Company produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is 0.3 pounds and 0.1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $0.1 per pound, and receiving and handling costs are $0.07 per pound. The hourly wage rate is $6 per hour, but a raise which will average $0.40 will go into effect soon. Payroll taxes are $1.30 per hour, and fringe benefits average $2.50 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is 0.2 hours and 0.1 hours, respectively. The standard direct labor rate per hour after the raise is going to be

a)$10.20.

b)$ 6.00.

c)$9.80.

d)$ 6.40.

Answer 1

• Correct Answer = Option ‘A’ $ 10.20

Hourly wage rate	$                     6.00
Raise	$                     0.40
Payroll taxes per hour	$                     1.30
Fringe benefit per hour	$                     2.50
Standard direct labor rate per hour	$                   10.20