Question

The following data is available for Wheels ‘N Spokes Repair Shop for 2022: Repair technicians’ wages $360,000 Fringe benefits 80,000 Overhead 60,000 Total $500,000 The desired profit margin is $40 per labor hour. The material loading charge is 40% of invoice cost. It is estimated that 5,000 labor hours will be worked in 2022. Wheels ‘N Spokes’ labor charge per hour in 2022 would be

Answer 1

$140 per hour

Step-by-step explanation:

The computation of labor charge per hour is shown below:-

Labor charge per hour = (Total of Wheels 'N Spokes Repair Shop ÷ labor hours) + Profit margin

= ($500,000 ÷ 5,000 hours) + $40 per labor hour

= $100 per hour + $40 per hour

= $140 per hour

Therefore for computing the labor charge per hour we simply applied the above formula.