Question

Presented below are data relating to labor for Verde Appliance Repair Shop. Repair-technicians' wages $133,400 Fringe benefits 58,000 Overhead 87,000 The desired profit margin per hour is $12. The material loading charge is 60% of invoice cost. Verde estimates that 5,800 labor hours will be worked next year. If Verde repairs a dishwasher that takes 1.2 hours to repair and uses parts of $90, compute the bill for the job.

Answer 1

Answer: The bill for the job is $405

Explanation:

Verde Appliance Repair Shop

Breakdown of Dishwasher Repair Job Cost

Technician's wages for the job = ($133,400 ÷ 5,800 hrs) × 1.2 hrs = $27.6

Fringe benefits = ($58,000 ÷ 5,800 hrs) × 1.2 hrs = $12

Overhead = ($87,000 ÷ 5,800 hrs) × 1.2 hrs = $18

Parts = $90

Profit margin = $12 × 1.2 hrs = $14.4

Sub-total cost = $27.6 + $12 + $18 + $90 + $14.4 = $162

Assume Total Cost = y

Material loading charge = 60% × y = 0.6y

Total Cost (y) = $162 + 0.6y

From the above,

$162 = y – 0.6y

$162 = 0.4y

Total Cost (y) = $162 ÷ 0.4 = $405