Question

Coronado Industries 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 1.0 hour per unit, and the allowance for rest periods and setup is 0.2 hours and 0.3 hours, respectively. The standard direct labor hours per unit is:________.

a. 1.5 hours
b. 1.0 hour
c. 1.3 hours
d. 1.2 hours

Answer 1

a. 1.5 hours

Step-by-step explanation:

The computation of the standard direct labor hours per unit is shown below:

Standard labor hour per unit is

= Production hours + setup hours + allowance for rest period

= 1.0 hours per unit + 0.2 per hours + 0.3 hours

= 1.5 hours

We simply added the production hours, setup hours, and the allowance for rest period so that the standard labor hour per unit could come