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

$12.00.

$12.30.

$15.60.

$15.90.

Answer 1

Calculate standard direct labor rate per hour

Hourly wages rate (12+.30)	12.30
Payroll taxes	1.20
Fringe benefits	2.4
Standard direct labor rate per hour	15.90

So answer is d) $15.90