Exercise 22-8 Second Chance Welding rebuilds spot welders for manufacturers. The

Question

Exercise 22-8 Second Chance Welding rebuilds spot welders for manufacturers. The following budgeted cost data for 2017 is available for Second Chance. Material Loading Time charges Charg Technicians' wages and benefits Parts manager's salary and benefits Office employee's salary and benefits Other overhead Total budgeted costs $238,000 $39,700 11,586 20,350 $308,000 $71,636 56,000 14,000 The company desires a $34.00 profit margin per hour of labor and a 20.00% profit margin on parts. It has budgeted for 7,000 hours of repair time in the coming year, and estimates that the total invoice cost of parts and materials in 2017 will be $407,000. Compute the rate charged per hour of labor. (Round answer to 2 decimal places, e.g. 10.50.) Labor rate per hour s LINK TO TEXT

Explanation / Answer

Ans.a Hourly labor rate for repairs Total cost / total hours Per hour charge Technician's wages and benefits 238000 / 7000 34 Overhead costs: Office employee's salary and benefits 56000 / 7000 8 Other overhead 14000 / 7000 2 Total cost 44 Add: Profit margin 34 Rate Charges Per Labor Hours 78.00 Ans.b Overhead Material charges / Total invioce cost Material loading charge Costs Parts manager's salary and benefits 39700 / 407000 * 100 9.75% Office employee's salary and benefits 11586 / 407000 * 100 2.85% Other overhead 20350 / 407000*100 5% Total cost 17.60% Add: Profit margin 20% Material Loading charge 37.600% Ans.c Particulars Labor charges (40 hours @ 78 per labor hour) 3120 Material charges Cost of parts and materials 2400 Material loading charge(2400 * 37.60%) 902.4 3302.4 Total estimated bill 6422.40

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