Exercise 8-8 Second Chance Welding rebuilds spot welders for manufacturers. The

Question

Exercise 8-8 Second Chance Welding rebuilds spot welders for manufacturers. The following budgeted cost data for 2017 is available for Second Chance. Time Charges $192,400 Material Loading Charges Technicians' wages and benefits Parts manager's salary and benefits Office employee's salary and benefits Other overhead Total budgeted costs $39,600 9,494 19,550 $259,000 68,644 51,800 14,800 The company desires $39.00 profit margin per hour o parts and materials in 2017 will be $391,000 abor and a 27.00% profit margin on parts. It has budgeted or 7,400 hours o repair urne in the corning year, and estimates that the total invoice cost Compute the rate charged per hour of labor. (Round answer to 2 decimal places, e.g. 10.50.) Labor rate per hour Compute the material loading percentage. (Round answer to 3 decimal places, e.g. 10.501.) Material loading percentage

Explanation / Answer

Calculation of rate charged per hour of labor :-

Total Budgeted Costs / Number of Hours + Profit margin

= $259000/ 7400 + $39.00 = $74.00

Material loading percentage: =

Material loading charges / Total invested costs + Profit margin

= $68644/ $391000 + 27.00 = 22.30%

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