A company is setting its direct materials and direct labor standards for its leading product. Direct material costs from the supplier are $ 6.00 per square foot, net of purchase discount. Freightminusin amounts to $ 0.10 per square foot. Basic wages of the assembly line personnel are $ 20.00 per hour. Payroll taxes are approximately 22 % of wages. How much is the direct labor cost standard per hour? (Round your answer to the nearest cent.)

Question

Business

Kayley Roman

10 January, 13:32

A company is setting its direct materials and direct labor standards for its leading product. Direct material costs from the supplier are $ 6.00 per square foot, net of purchase discount. Freightminusin amounts to $ 0.10 per square foot. Basic wages of the assembly line personnel are $ 20.00 per hour. Payroll taxes are approximately 22 % of wages. How much is the direct labor cost standard per hour? (Round your answer to the nearest cent.)

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Answers (1)

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Samara Newton · Answer 1

Direct labour cost per hour is $24.40.

Explanation:

The formula used to calculate the direct labor standard is:

Direct labor standard = Basic wages + Payroll tax

This is the same as:

Direct labor standard = Basic wages + 22% of Basic wages

Basic wages = $20.00/hr

Payroll tax = 22% (0.22) of basic wages.

Therefore, we have:

Substituting the values into the equation:

Direct labor standard = $20 + (0.22 X $20)

= $20 + $4.4

Direct labor standard = $24.40