Question - Monte Services, Inc. is trying to establish the standard labor cost of a typical oil change. The following data have been collected from time and motion studies conducted over the past month.
Actual time spent on the oil change 2.00 hour
Hourly wage rate $12
Payroll taxes 16% of wage rate
Setup and downtime 10% of actual labor time
Cleanup and rest periods 35% of actual labor time
Fringe benefits 24% of wage rate
(a) Determine the standard direct labor hours per oil change.
(b) Determine the standard direct labor hourly rate.