Oxnard Industries produces a product that requires 2.6 pounds of materials per u
ID: 2491072 • Letter: O
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 $3 per pound, but a 2% discount is usually taken. Freight costs are $.15 per pound, and receiving and handling costs are $.10 per pound. The hourly wage rate is $10.00 per hour, but a raise which will average $.25 will go into effect soon. Payroll taxes are $1.00 per hour, and fringe benefits average $2.00 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 materials quantity per unit is a. 2.6 pounds. b. 2.7 pounds. c. 2.9 pounds. d. 3.0 pounds. 4. The standard direct labor hours per unit is a. 1 hour. b. 1.1 hours. c. 1.2 hours. d. 1.3 hours.
Explanation / Answer
Direct Material:
Net Raw Material Required = 2.6 Pounds
+ Allowance
Waste 0.20 Pounds
Spoilage 0.10 pounds
-----------------
3.00 Pounds Standard Direct Material Quantity Per Unit
Option ‘d’ correct
Direct Labor :
Net Hrs Required =1 hr
+ Allowance
Rest 0.2 hrs
Set Up 0.1 hrs
---------------
1.3 hrs Standard direct Labor hrs per unit
Option ‘d’ correct
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