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Wasson's Classic Cars restores classic automobiles to showroom status. Budgeted data for the current year are:

The company anticipated that the restorers would work a total of 12,600 hours this year. Expected parts and materials were $1,300,000.

Time Charges Material Loading Charges
Restorer's wages and fringe benefits $281,736 -
Purchasing agent's salary and fringe benefits - $81,000
Administrative salaries and fringe benefits 50,526 21,180
Other overhead costs 15,750 79,820
Total budgeted costs $348,012 $182,000

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 $68.10 and that the material loading charge was 83.20%.

a. Determine the profit margin per hour on labor. (Round answer to 2 decimal places, e.g. 10.50.)
b. Determine the profit margin on materials. (Round answer to 2 decimal places, e.g. 10.50.)
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 $62,000 in parts and materials.

Sagot :

Anthougoidn

a. The determination of the profit margin per hour on labor is $510,048 ($68.10 x 12,600 - $348,012).

b. The determination of the profit margin on materials is $242,359.94 ($510,048 x 83.2% - $182,000).

c. The determination of the total price of labor and materials on a job completed after the fire requiring 150 hours of labor and $62,000 in parts and materials is as follows:

                              Labor                                  Materials

Hours required   150 hrs.                           $62,000

Total price       $10,215 ($68.10 x 150)      $51,584 ($62,000 x 83.20%)

What is the profit margin?

Profit margin is computed as the revenue minus the expenses.

For trading organizations, the profit margin is the difference between the sales revenue and the operating expenses.

Data and Calculations:

Estimated total labor hours = 12,600

Expected parts and materials costs = $1,300,000

                                                                   Time Charges   Material Loading

                                                                                                    Charges

Restorer's wages and fringe benefits          $281,736                           -

Purchasing agent's salary and fringe benefits   -                      $81,000

Administrative salaries and fringe benefits   50,526                   21,180

Other overhead costs                                      15,750                 79,820

Total budgeted costs                                  $348,012             $182,000

Hourly labor rate = $68.10

Material loading charge = 83.20%

Learn more about profit margins at https://brainly.com/question/1231184

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