Theresa Corporation, which manufactures baskets, is developing direct labor standards. The basic direct labor rate is $21.00 per hour. Payroll taxes are 9% of the basic direct labor rate, while fringe benefits such as vacation and health care insurance, are $4.00 per hour. What is the standard rate per direct labor hour?
A)$26.89
B)$21.00
C)$22.89
D)$25.00

Question

Quizplus · Accepted Answer

The standard rate per direct labor hour is calculated by adding the basic direct labor rate, the payroll taxes, and the fringe benefits. The payroll taxes are 9% of $21.00, which is $1.89 ($21.00 * 9%). The fringe benefits add another $4.00 per hour. Therefore, the total standard rate per direct labor hour is $21.00 + $1.89 + $4.00 = $26.89.

Theresa Corporation, Which Manufactures Baskets, Is Developing Direct Labor Standards