Oxnard Industries 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 $2 per pound but a 2% discount is usually taken. Freight costs are $.10 per pound and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour but a raise which will average $.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 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 is
A) $ 12.00.
B) $ 12.30.
C) $15.60.
D) $15.90.

Question

Oxnard Industries 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 $2 per pound but a 2% discount is usually taken. Freight costs are $.10 per pound and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour but a raise which will average $.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 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 is
A) $ 12.00.
B) $ 12.30.
C) $15.60.
D) $15.90.

Quizplus · Accepted Answer

The standard direct labor rate per hour includes the hourly wage rate ($12.00), the upcoming raise ($0.30), payroll taxes ($1.20), and fringe benefits ($2.40). Adding these together gives $12.00 + $0.30 + $1.20 + $2.40 = $15.90.

Oxnard Industries Produces a Product That Requires 2