This objective test question contains a question type which will only appear in a computer-based exam, but this question provides valuable practice for all students whichever version of the exam they are taking. The predicted selling price for a product has been set at $56 per unit. The desired mark-up on cost is 25% and the material cost for the product is estimated to be $16 before allowing for additional materials to allow for shrinkage of 20% (for every 10 kg of material going in only 8 kg comes out). If labour is the only other cost and 2 hours are needed what is the most the business can pay per hour if a cost gap is to be avoided? The maximum rate per hour is
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