Question

Exercise 21-08 a-c (Video)

Bonita Welding rebuilds spot welders for manufacturers. The following budgeted cost data for 2020 is available for Bonita.

			Time Charges			Material Loading Charges
	Technicians' wages and benefits		$197,600				-
	Parts manager's salary and benefits		-				$39,100
	Office employee's salary and benefits		53,200				13,420
	Other overhead		30,400				20,800
	Total budgeted costs		$281,200				$73,320

The company desires a $35 profit margin per hour of labor and a 20.00% 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 2020 will be $416,000.

Compute the rate charged per hour of labor.

Labor rate

$

per hour

Compute the material loading percentage. (Round answer to 3 decimal places, e.g. 10.501%.)

Material loading percentage

%

Coronado Corporation has requested an estimate to rebuild its spot welder. Bonita estimates that it would require 40 hours of labor and $2,400 of parts. Compute the total estimated bill. (Round answer to 2 decimal places, e.g. 10.50.)

Total estimated bill

$

Answer 1

1.

Labor rate per hour = (Total budgeted time charges / Total budgeted hours) + Profit margin per hour

Labor rate per hour = ($281,200 / 7,600) + $35

Labor rate per hour = $37 + 35 = $72 per hour

2.

Material loading percentage = (Total budgeted material loading charges / Total invoice cost * 100) + Profit margin on parts

Material loading percentage = ($73,320 / $416,000 * 100) + 20%

Material loading percentage = 17.625% + 20% = 37.625%

3.

Labor cost (40*$72)	$2,880
Cost of parts	2,400
Material loading costs ($2,400*37.625%)	903
Total estimated bill	$6,183