Second Chance Welding rebuilds spot welders for manufacturers. The following bud

Question

Second Chance Welding rebuilds spot welders for manufacturers. The following budgeted cost data for 2017 is available for Second Chance.
Time
Charges Material
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Charges     Technicians' wages and benefits $260,700 -        Parts manager's salary and benefits -        $40,300 Office employee's salary and benefits 55,300 10,729 Other overhead 15,800 29,260 Total budgeted costs $331,800 $80,289
The company desires a $38.00 profit margin per hour of labor and a 24.00% profit margin on parts. It has budgeted for 7,900 hours of repair time in the coming year, and estimates that the total invoice cost of parts and materials in 2017 will be $418,000.

Explanation / Answer

The rate charged per hour of labor = time charges / repair hours = $331800/ 7900 = $42 per labor hour The material loading percentage =Material Loading Charges / Budgeted cost of parts = $80289/418000 = 19.21% Total estimated bll = 35 * $42 per repair time + cost of parts $2400 + material loading $2400*19.21% = $4331.04

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