Pittmon Corporation Is Developing Direct Labor Standards

question 74

Essay

Pittmon Corporation is developing direct labor standards. The basic direct labor wage rate is $13.90 per hour. Employment taxes are 10% of the basic wage rate. Fringe benefits are $4.28 per hour. A particular product requires 0.90 direct labor-hours per unit. The allowance for breaks and personal needs is 0.07 direct labor-hours per unit. The allowance for cleanup, machine downtime, and rejects is 0.12 direct labor-hours per unit.
Required:
a. Determine the standard rate per direct labor-hour. Show your work!
b. Determine the standard direct labor-hours per unit of product. Show your work!
c. Determine the standard labor cost per unit of product to the nearest cent. Show your work!

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Definitions:

Stockholders

Individuals or entities that own shares in a corporation, giving them ownership interest.

Creditors

Individuals or institutions that lend money or extend credit, and are thus owed repayment by the borrower or debtor.

Just-In-Time Inventory

An inventory strategy companies employ to increase efficiency and decrease waste by receiving goods only as they are needed in the production process.

Inventory Levels

A measure of the quantity of goods and materials on hand in a business at any given time.