Exercise 8-8

Second Chance Welding rebuilds spot welders for manufacturers. The following budgeted cost data for 2014 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 2014 will be $400,000.

A. Compute the rate charged per hour of labor. (Round answer to 2 decimal places, e.g. 10.50.)

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

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. (Round answer to 2 decimal places, e.g. 10.50.)