A Company Is Setting Its Direct Materials and Direct Labor

question 82

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. How much is the direct labor cost standard (per hour) ?

• A)$2 per hour
• B)$10 per hour
• C)$12 per hour
• D)$17 per hour

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Definitions:

Price

The cost at which a product or service is offered for sale in the marketplace.

Market Demand Curve

A graphical representation of the quantity of goods being purchased at different prices within a market.

Individual Demand Curves

Graphs showing the relationship between the price of a good and the quantity of that good a single consumer is willing to buy at various prices.

Horizontal Sum

In economics, the process of aggregating demand curves of different individuals to derive the market demand curve.