Question

Happy Helpers Maid Service is calculating its standard direct labor rate. The direct labor rate is $11 per hour. Happy Helpers incurs payroll tax expense of 14% of the direct labor rate and incurs costs for sick-days and vacation days of $8 per hour. What is the standard rate per direct labor hour?

Answer 1

$20.54

Explanation:

Happy Helpers Maid Service's payroll tax expense of 14% should only be applied to the direct labor rate ($11) and not to the incurred costs for sick-days and vacations. Therefore, the standard rate per direct labor hour (S) is given by the sum of the direct labor rate (including taxes) and incurred costs:

`S= (\$ 11*1.14) + \$8\\S=\$20.54`