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:

Satisficing

A decision-making strategy that aims for a satisfactory or adequate solution rather than the optimal one.

Work Schedule

The planned hours and days that an employee is expected to work within a given period.

Evaluates

The process of assessing or determining the value, significance, or condition of something, often for the purpose of making decisions or drawing conclusions.

Escalation of Commitment

Is a pattern of behavior in which an individual or group continues to invest in a decision despite evidence of its ineffectiveness or the likelihood of negative outcomes.