Question

Theresa Corporation, which manufactures baskets, is developing direct labor standards. The basic direct labor rate is $18.00 per hour. Payroll taxes are 14% of the basic direct labor rate, while fringe benefits such as vacation and health care insurance, are $4.00 per hour. What is the standard rate per direct labor hour?

Answer 1

$24.52

Explanation:

The basic direct labor rate = $18.00 per hour.

Payroll taxes are 14% of the basic direct labor rate

So, payroll Tax = 14% of 18

So, payroll Tax =
`(14)/(100) * 18 = 2.52`

Fringe benefits such as vacation and health care insurance, are $4.00 per hour.

So, standard rate per direct labor hour= $18.00 +$2.52+$4.00

Standard rate per direct labor hour= $24.52

Hence the standard rate per direct labor hour is $24.52