Managerial Accounting: Tools for Business Decision Making
7th Edition
ISBN: 9781118334331
Author: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Publisher: WILEY
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Chapter 8, Problem 8.10E
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 |
$270,000 | |
| Purchasing agent’s salary and fringe benefits | $ 67,500 | |
| Administrative salaries and fringe benefits | 54,000 | 21,960 |
| Other |
24,000 | 77,490 |
| Total budgeted costs | $348,000 | $166,950 |
The company anticipated that the restorers would work a total of 12,000 hours this year. Expected parts and materials were $1,260,000.
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 $70,00 and that the material loading charge was 83,25%.
Instructions
(a) Determine the profit margin per hour on labor.
(b) Determine the profit margin on materials.
(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 $60,000 in parts and materials.
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Chapter 8 Solutions
Managerial Accounting: Tools for Business Decision Making
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