A Company Is Setting Its Direct Materials and Direct Labor

question 144

Multiple Choice

A company is setting its direct materials and direct labor standards for its leading product. Materials cost from the supplier are $5 per square foot, net of purchase discount. Freight-in amounts to $0.10 per square foot. Basic wages of the assembly line personnel are $10 per hour. Payroll taxes are approximately 20% of wages. Benefits amount to $2 per hour. How much is the direct material cost standard (per square foot) ?

• A)$5.10 per square foot
• B)$5.00 per square foot
• C)$12.00 per square foot
• D)$17.10 per square foot

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Definitions:

Futures Contract

A legal agreement to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future.

Specified Amount

A clearly defined sum or quantity noted in a financial agreement or contract.

Predetermined Price

A specific price set in a contract or agreement, at which a particular transaction (such as buying or selling) will occur in the future.

Expiration Date

The specified date on which an options or futures contract becomes void and ceases to trade.