Nemad Company decided to adopt a standard cost system. The production manager wanted to set standards to
Question:
The workweek for production workers at the Nemad Company was 40 hours. Included in this time were two daily 15-minute breaks. Management estimated that over the course of a year, an average worker would spend 15 percent of his or her nominal working time waiting for tools, for machine setups, and for necessary interruptions of work. Time-study observations indicated that a worker could make a selector lever assembly in 12 minutes. Management estimated that workers under observation for time-study produce at about 90 percent of their normal rate. The average pay for production workers was $ 18 per hour.
Inflation was expected to increase production costs at a rate of about 4 percent for the next year. Production volume was level throughout the year.
Required:
What should be the direct material and direct labor standards for the manufacture of one selector level assembly for next year?
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Related Book For
Accounting Texts and Cases
ISBN: 978-1259097126
13th edition
Authors: Robert Anthony, David Hawkins, Kenneth Merchant
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