Vasquez, Inc.is establishing the direct materials and direct labor standards for its leading product.Materials cost from the supplier are $5 per square foot, net of purchase discount.Freight-in amounts to $0.10 per square foot.Basic wages of the assembly line personnel are $10 per hour.Payroll taxes are approximately 20% of wages.How much is the direct labor cost standard per hour?
A)$5.00 per hour.
B)$10.00 per hour.
C)$12.00 per hour.
D)$17.10 per hour.
E)None of the answers is correct.

Question

Quizplus · Accepted Answer

Direct materials cost = $5 per sq. ft. + $0.10 per sq. ft. (freight-in) = $5.10 per sq. ft. 
Direct labor cost = Basic wages + Payroll taxes = $10 per hour + ($10 per hour x 20%) = $12 per hour.