Chapter 8, Problem 8.10E

Wasson’s Classic Cars restores classic automobiles to showroom status. Budgeted data for the current year are as follows.

	Time Charges	Material Loading Charges
Restorers’ wages and fringe benefits	$270,000
Purchasing agent’s salary and fringe benefits		$ 67,500
Administrative salaries and fringe benefits	54,000	21,960
Other overhead costs	24,000	77,490
Total budgeted costs	$348,000	$166,950

The company anticipated that the restorers would work a total of 12,000 hours this year. Expected parts and materials were $1,260,000.

In late January, the company experienced a fire in its facilities that destroyed most of the accounting records. The accountant remembers that the hourly labor rate was $70,00 and that the material loading charge was 83,25%.

Instructions

(a) Determine the profit margin per hour on labor.

(b) Determine the profit margin on materials.

(c) Determine the total price of labor and materials on a job that was completed after the fire that required 150 hours of labor and $60,000 in parts and materials.