Question 22 Labor data for making one gallon of finished product in Bing Company

Question

Question 22 Labor data for making one gallon of finished product in Bing Company are as follows. (1) Price—hourly wage rate $13.62, payroll taxes $0.78, and fringe benefits $1.66. (2) Quantity—actual production time 1.20 hours, rest periods and cleanup 0.34 hours, and setup and downtime 0.18 hours. Compute the following. (Round answers to 2 decimal places, e.g. 1.25.) (a) Standard direct labor rate per hour. $ (b) Standard direct labor hours per gallon. hours (c) Standard labor cost per gallon. $

Explanation / Answer

Standard direct labour rate per hour

= hourly wage rate + payroll tax + fringe benefit

= $13.62 + $0.78 + $1.66

= $16.06

(b) Standard direct labour hours per gallon

= actual production time + rest periods and cleanup + setup and downtime

= 1.20 hours + 0.34 hours + 0.18 hours

= 1.72 hours per gallon

(c) Standard labour cost per gallon

= Standard hours to produce one gallon x standard labour cost per hour

= 1.72 hours x $16.06/hour

= $27.62

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