Breakmorning Corporation produces a product that requires 2.6 pounds of material

Question

Breakmorning Corporation produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $3 per pound, but a 2% discount is usually taken. Freight costs are $.15 per pound, and receiving and handling costs are $.10 per pound. The hourly wage rate is $10.00 per hour, but a raise which will average $.25 will go into effect soon. payroll taxes are $1.00 per hour, and fringe benefits average $2.00 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively. The standard direct labor rate per hour will be

Explanation / Answer

hourly wage rate $10.00 per hour Payroll taxes $1.00 per hour Fringe benefits $2.00 per hour Total labor cost $13.00 Units produced 1 per hour allowance for rest period 0.2 hour Allowance for setup 0.1 hour Total hrs 1.3 Std direct labor rate per hour $10.00 per hour

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