Question

Labor data for making one gallon of finished product are as follows:

(1) Price—hourly wage rate $13.00, payroll taxes $0.80, and fringe benefits $1.20.

(2) Quantity—actual production time 1.1 hours, rest periods and cleanup 0.25 hours, and

setup and downtime 0.15 hours.

Answer 1

The labor cost for making one gallon of finished product can be calculated by multiplying the hourly wage rate by the actual production time, and then adding the additional costs for payroll taxes and fringe benefits. We can use the given data to calculate the labor cost as follows:

Labor cost per hour = $13.00 + $0.80 + $1.20 = $15.00

Total labor time = 1.1 + 0.25 + 0.15 = 1.5 hours

Labor cost per gallon = $15.00 x 1.5 = $22.50

Therefore, the labor cost for making one gallon of finished product is $22.50.