Question

Crane Company recently billed a customer $ 720. Labor hours were 6 and the cost of the materials used was $ 150. If the company’s hourly labor rate was $ 75, what material loading charge was used?
50.00%
80.00%
40.00%
100.00%

Answer 1

The materials were charged at a loading charge of 80.00% of their cost.

The total charge was $720 and included both the material charge and the labor charge.

The first thing to do is therefore find out the cost of the materials without the labor charge:

= Total cost - labor charge

= 720 - (6 labor hours x 75 per labor hour)

= 720 - 450

= $270

The total cost of materials is $270. To find the material loading charge, use the formula:

= (Total cost of materials - Cost of materials used) / Cost of materials used x 100%

= (270 - 150) / 150 x 100%

= 120 / 150 x 100%

= 80%

In conclusion, the material loading charge was 80.00%.

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