Question

Second Chance Welding rebuilds spot welders for manufacturers. The following budgeted cost data for 2020 is available for Second Chance. Time Charges Material Loading Charges Technicians' wages and benefits $251,600 - Parts manager's salary and benefits - $40,700 Office employee's salary and benefits 59,200 11,820 Other overhead 7,400 20,800 Total budgeted costs $318,200 $73,320 The company desires a $40 profit margin per hour of labor and a 28.00% profit margin on parts. It has budgeted for 7,400 hours of repair time in the coming year, and estimates that the total invoice cost of parts and materials in 2020 will be $416,000. Compute the rate charged per hour of labor.

Answer 1

Answer:

$83

Explanation:

The formula to compute the rate charged per hour of labor is shown below:

= Total budgeted costs of Time charges ÷ budgeted hours + profit margin per hour of labor

= $318,200 ÷ 7,400 hours + $40

= $43 + $40

= $83

We simply compute the per hour and then add the profit margin per hour so that the correct rate per hour can come

All other information which is given is not relevant. Hence, ignored it