Question

Exercise 8-8 (Video) Second Chance Welding rebuilds spot welders for manufacturers. The following budgeted cost data for 2020 is available for Second Chance. Time Charges $198,800 Material Loading Charges Technicians' wages and benefits Parts manager's salary and benefits Office employee's salary and benefits Other overhead Total budgeted costs 56,800 7,100 $262,700 $39,800 9,700 28,000 $77,500 - The company desires a $35 profit margin per hour of labor and a 23.00% profit margin on parts. It has budgeted for 7,100 hours of repair time in the coming year, and estimates that the total invoice cost of parts and materials in 2020 will be $400,000 Compute the rate charged per hour of labor. Labor rate per hour Compute the material loading percentage. (Round answer to 3 decimal places, e.g. 10.5019.) Material loading percentage Pace Corporation has requested an estimate to rebuild its spot welder. Second Chance estimates that it would require 44 hours of labor and $2,400 of parts. Compute the total estimated bill. (Round answer to 2 decimal places, e.g. 10.50.) Total estimated bill

Answer 1

Solution: a) The rate charged per hour of labor is: Total time charges Estimated total repair time Time charges per hour Desired profit per hour Rate charged per hour $262,700 7,100 hours $37 $35 $72 b) The materials load percentage is: $400,000 Invoice cost parts Desired profit |($400,000 x 0.23) Total loading charges Total Material loading amount Materials loading percentage |($169,500/$400,000) x 100 $92,000 $77,500 $169,500 42.375% c) The total estimated bill is: Direct labor (44 x $72) Materials ($2,400 x 0.42375) 3,168 $ 1,017 X Total estimated bill 4,185