Question

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			$220,500
	Purchasing agent's salary and fringe benefits							$68,000
	Administrative salaries and fringe benefits			52,500				20,900
	Other overhead costs			21,000				76,200
	Total budgeted costs			$294,000				$165,100

The company anticipated that the restorers would work a total of 10,500 hours this year. Expected parts and materials were $1,270,000.

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 $69 and that the material loading charge was 84%.

Determine the profit margin per hour on labor

Determine the profit margin on materials

Answer 1

Answer:
(a)
Hourly labor Rate	$ 69
Less: Time Charge rate per hour                ( $ 294,000 / 10,500 hours )	($ 28)
Profit margin per hour on labor	$ 41
(b)
Material Loading charge	84%
less: Cost of Material Loading charges                ( $ 165,100 / $ 1,270,000 )	-13%
Profit margin on materials	71%