Swifty Corporation produces a product that requires 2.6 pounds of materials per

Question

Swifty Corporation 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 $0.10 per pound, and receiving and handling costs are $0.07 per pound. The hourly wage rate is $12.00 per hour, but a raise which will average $0.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1.5 hour per unit, and the allowance for rest periods and setup is 0.5 hours and 0.4 hours, respectively. The standard direct labor hours per unit is

Explanation / Answer

Calculate standard labour hour per unit :

Standard labour hour = Production hours+setup hours+allowance for rest period

                               = (1.5+.4+.5)

Standard labour hour = 2.40 hour per unit

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