Chapter 8, Problem 8.8E

Second Chance Welding rebuilds spot welders for manufacturers. The following budgeted cost data for 2017 is available for Second Chance.

	Time Charges	Material Loading Charges
Technicians’ wages and benefits	$228,000	—
Parts manager’s salary and benefits	—	$42,500
Office employee’s salary and benefits	38,000	9,000
Other overhead	15,200	24,000
Total budgeted costs	$281,200	$75,500

The company desires a $30 profit margin per hour of labor and a 20% profit margin on parts. It has budgeted for 7,600 hours of repair time in the coming year, and estimates that the total invoice cost of parts and materials in 2017 will be $400,000.

Instructions

(a) Compute the rate charged per hour of labor.

(b) Compute the material loading percentage. (Round to three decimal places.)

(c) Pace Corporation has requested an estimate to rebuild its spot welder. Second Chance estimates that it would require 40 hours of labor and $2,000 of parts. Compute the total estimated bill.