Jaycee Auto Repair has the following budgeted costs for the next year:
Time Charges Material Charges
Shop employees' wages and benefits $120,000 $-
Parts manager's salary and benefits - 45,000
Office employee's salary and benefits 30,000 15,000
Other overhead 15,000 40,000
Invoice cost of parts and materials - 400,000
Total budgeted costs $165,000 $500,000
Jaycee Auto Repair budgets 7,500 hours of repair time and it desires a profit margin of $25 per hour of labor. A markup on material cost is assumed to be 40%. Jaycee estimates that the repairs to a Cadillac Escalade damaged in an accident will take 45 hours of labor and $3,500 in parts and materials. The total cost of the repairs is
a) $7,015.
b) $5,890.
c) $5,775.
d) $7,890.
d) $7,890.
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