Jaycee Auto Repair has the following budgeted costs for the next year: $\begin{array}{lcc}&\text { Time Charges }&\text { Material Charges }\
\text { Shop employees' wages and benefits } & \$ 120,000 & \$- \
\text { Parts manager's salary and benefits } & - & 45,000 \
\text { Office employee's salary and benefits } & 30,000 & 15,000\
\text { Other overhead } & 15,000 & 40,000 \
\text { Invoice cost of parts and materials } & - & 400,000\
\text { Total budgeted costs }&\$165,000&\$500,000
\end{array}$
-The labor rate to be used next year assuming 7,500 hours of repair time and a profit margin of $25 per labor hour is
A)$22.
B)$41.
C)$43.
D)$47.

Question

Jaycee Auto Repair has the following budgeted costs for the next year: $\begin{array}{lcc}&\text { Time Charges }&\text { Material Charges }\
\text { Shop employees' wages and benefits } & \$ 120,000 & \$- \
\text { Parts manager's salary and benefits } & - & 45,000 \
\text { Office employee's salary and benefits } & 30,000 & 15,000\
\text { Other overhead } & 15,000 & 40,000 \
\text { Invoice cost of parts and materials } & - & 400,000\
\text { Total budgeted costs }&\$165,000&\$500,000
\end{array}$ 
-The labor rate to be used next year assuming 7,500 hours of repair time and a profit margin of $25 per labor hour is
A)$22.
B)$41.
C)$43.
D)$47.

Quizplus · Accepted Answer

The labor rate is calculated by dividing the total time charges by the number of hours and adding the profit margin: $(\$165,000 / 7,500) + \$25 = \$47$.

Jaycee Auto Repair Has the Following Budgeted Costs for the Next