A company is setting its 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)$2 per hour
B)$10 per hour
C)$12 per hour
D)$17 per hour

Question

Quizplus · Accepted Answer

Direct Materials Standard = $5 + $0.10 = $5.10 per square foot
Direct Labor Standard = Basic wages + Payroll taxes 
= $10 + ($10 x 20%) 
= $10 + $2 
= $12 per hour

A Company Is Setting Its Direct Materials and Direct Labor