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Wassonâs Classic Cars restores classic automobiles to showroom status. Budgeted data for the current year are as follows.

Time Charges Material Loading Charges
Restorers' wages and fringe benefits $237,300
Purchasing agent's salary and fringe benefits $68,560
Administrative salaries and fringe benefits 45,200 20,200
Other overhead costs 11,300 76,080
Total budgeted costs $293,800 $164,840

The company anticipated that the restorers would work a total of 11,300 hours this year. Expected parts and materials were $1,268,000. In late January, the company experienced a fire in its facilities that destroyed most of the accounting records. The accountant remembers that the hourly labor rate was $69 and that the material loading charge was 84%.

Required:
Determine the profit margin on materials.

Sagot :

Parrain

Answer: 71%

Explanation:

The Budgeted material loading charge was 84% of material cost of $1,268,000.

Yet the actual loading cost was $164,840 which means that actual loading cost percentage is:

= 164,840 / 1,268,000 * 100%

= 13%

Profit margin = Budgeted percentage - Actual percentage

= 84% - 13%

= 71%

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