Question

Swifty Corporation produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is 0.3 pounds and 0.1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $0.10 per pound, and receiving and handling costs are $0.07 per pound. The hourly wage rate is $12.00 per hour, but a raise which will average $0.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1.5 hour per unit, and the allowance for rest periods and setup is 0.5 hours and 0.4 hours, respectively. The standard direct labor hours per unit is:_________

Answer 1

Swifty Corporation

The standard direct labor hours per unit is:_________

= 0.6 hours.

Step-by-step explanation:

a) Data and Calculations:

Materials required per unit = 2.6 pounds

Allowance for waste per unit = 0.3 pounds

Allowance for spoilage per unit = 0.1 pounds

Standard materials per unit = 3 pounds (2.6 + 0.3 + 0.1)

Purchase price per pound = $1.96 ($2 - 0.04)

Freight costs per pound = $0.10

Receiving and handling costs per pound = $0.07

Hourly wage rate = $12 per hour

Possible raise in hourly wage = $0.30

Payroll taxes = $1.20 per hour

Fringe benefits average = $2.40 per hour

Standard production time per unit = 1.5 hour

Allowance for rest periods = 0.5 hours

Allowance for setup = 0.4 hours

The standard direct labor hours per unit = 0.6 hours(1.5 - 0.5 - 0.4)