Exercise 22-8 (Part Level Submission) Second Chance Welding rebuilds spot welder

Question

Exercise 22-8 (Part Level Submission) Second Chance Welding rebuilds spot welders for manufacturers. The following budgeted cost data for 2017 is available for Second Chance Time Charges $229,100 Material Loading Charges Technicians' wages and benefits Parts manager's salary and benefits Office employee's salary and benefits Other overhead Total budgeted costs 55,300 31,600 $316,000 40,500 10,735 20,450 $71,685 The company desires a $37.00 profit margin per hour of labor and a 21.00% 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 $409,000 Compute the rate charged per hour of labor. (Round answer to 2 decimal places,e.g. 10.50.) Labor rate per hour

Explanation / Answer

Answer a

Labour rate $ 77 per hour

Explanation :

Rate charged per hour of labour = (Time charges 's budgeted cost / Budgeted hours of repair time) + Profit margin per unit.

= ($316,000 / 7,900 hours) + $37 = $40 + $37 = $77

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