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E8-10 Wasson’s Classic Cars

Price: $1.99

E8-10 Wasson’s Classic Cars restores classic automobiles to showroom status. Budgeted
data for the current year are:

  Time Charges Material Loading Charges
Restorers' wages and fringe benefits   270,000
Purchasing agent's salary and fringe benefits   67,500
Administrative salaries and fringe benefits   54,000  21,960
Other overhead costs   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%.

(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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