Question

Presented below are data relating to labor for Verde Appliance Repair Shop. Repair-technicians' wages $111,188 Fringe benefits 27,852 Overhead 47,388 The desired profit margin per hour is $24.34. The material loading charge is 60% of invoice cost. Verde estimates that 4,400 labor hours will be worked next year. If Verde repairs a dishwasher that takes 1.5 hours to repair and uses parts of $84.54, compute the bill for the job.

Answer 1

Total cost = $236.929

+) Labor charges = $100.065

+) Cost of parts = $85.54

+) Material loading changes = $51.324

Step-by-step explanation:

First, we need to determine the hourly rate of labor in Verde Appliance Repair shop.

+) Total cost of Verde Appliance Repair Shop in a year is:

Total Cost = Repair-technicians' wages + Fringe Benefits + Overhead = 111,188 + 27,852 + 47,388 = $186,428

+) As the total labor hours are 4,400

=> Cost per hour = Total Cost ÷ Total Labor Hours = $186,428 ÷ 4,400 = $42.37

+) The hourly labor rate = Cost per hour + Profit margin = 42.37 + 24.34 = $66.71

The bill for the job if Verde repairs a dishwasher would include:

+) Labor charges = Hours x Hourly labor rate = 1.5 x 66.71 = $100.065

+) Cost of parts = $85.54

+) Material loading changes = 60% x Cost of parts = 0.6 x 85.54 = $51.324

=> Total costs = Labor charges + Cost of parts + Material loading changes

=> Total costs = 100.065 + 85.54 + 51.324 = $236.929