Acc560 Managerial Accounting

E8-8

Padong Remanufacturing rebuilds spot welders for manufacturers. The following budgeted cost data for 2008 is available for Padong. Material Loading Charges Time 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 $35 profit margin per hour of labor and a 25% 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 2008 will be $400,000.

Instructions:

a. Compute the rate charged per hour of labor.

b. Compute the material loading percentage. (Round answer to 3 decimal places, e.g. 2.250.)

c. Lindy Corporation has requested an estimate to rebuild its spot welder. Padong estimates that it would require 40 hours of labor and $2,500 of parts. Compute the total estimated bill. (Use the rounded amount from the previous questions when calculating the answer for this question. Round answer to 2 decimal places, e.g. 10.50.)