The standard for the direct labor rate per hour includes fringe benefits such as health care insurance and vacations.

Question

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The direct labor rate includes not only the wages paid to the workers, but also the additional costs associated with their employment, such as fringe benefits like health care insurance, paid time off, and other benefits. These costs must be factored into the hourly rate used to calculate the cost of producing a unit of a product or providing a service.

The Standard for the Direct Labor Rate Per Hour Includes