a. The determination of the profit margin per hour on labor is $510,048 ($68.10 x 12,600 - $348,012).
b. The determination of the profit margin on materials is $242,359.94 ($510,048 x 83.2% - $182,000).
c. The determination of the total price of labor and materials on a job completed after the fire requiring 150 hours of labor and $62,000 in parts and materials is as follows:
Labor Materials
Hours required 150 hrs. $62,000
Total price $10,215 ($68.10 x 150) $51,584 ($62,000 x 83.20%)
<h3>What is the profit margin?</h3>
Profit margin is computed as the revenue minus the expenses.
For trading organizations, the profit margin is the difference between the sales revenue and the operating expenses.
<h3>Data and Calculations:</h3>
Estimated total labor hours = 12,600
Expected parts and materials costs = $1,300,000
Time Charges Material Loading
Charges
Restorer's wages and fringe benefits $281,736 -
Purchasing agent's salary and fringe benefits - $81,000
Administrative salaries and fringe benefits 50,526 21,180
Other overhead costs 15,750 79,820
Total budgeted costs $348,012 $182,000
Hourly labor rate = $68.10
Material loading charge = 83.20%
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