Question

Labor time = 8 hours

Overhead rate = 65%
Retail price of parts = $98.70
Total cost of job = $242.58

What is hourly rate for labor? $ _________

Answer 1

Hourly Rate for labor = 10.9%

Explanation:

Labor time = 8 hours

Overhead rate = 65%

Retail price of parts = $98.70

Total cost of job = $242.58

Let hourly rate of the labor be r

⇒ Labor time × (1 + overhead rate) × r + Retail price = Total cost

⇒ 8 × (1 + 0.65) × r + 98.70 = 242.58

⇒ 8 × 1.65 × r = 242.58 - 98.70

⇒ 13.2 × r = 143.88

⇒ r = 10.9

Thus, Hourly Rate for labor = 10.9%

Answer 2

 8(1.65)R + 98.70 = 242.58 13.20R = 143.88 [subtract 98.70 from both sides] R = $10.90 / hr. [divide both sides by 13.20]