Question

P22-3B Armstrong Bike Repair Shop has budgeted the following time and material for 2017 Armstrong Bike Repair Shop Budgeted Costs for the Year 2017 Time Material Charges Loading Charges Shop employees' wages and benefits $36.000 Parts supervisor's salary and benefits $20,000 Office employee's salary and benefits 15,000 10,000 Overhead (supplies, depreciation, advertising, utilities) 19,000 15,000 Total budgeted costs $70.000 $45.000 Armstrong budgets 2,500 hours of repair time in 2017 and will bill a profit of $5 per labor hour along with a 15% profit markun on the invoice cost of parts. The estimated invoice cost for parts to be used is $75,000. On January 5, 2017, Armstrong is asked to submit a price estimate to fix a Superior Mountain bike. Armstrong estimates that this job will consume 4 hours of labor and $200 in parts. Instructions (a) Compute the labor rate for Armstrong Bike Repair Shop for the year 2017 (b) Compute the material loading charge percentage for Armstrong Bike Repair Shop for the year 2017 (c) Prepare a time-and-material price quotation for fixing the Superior Mountain bike. Total Cost Total Hours Per Hr Shge (a) Computation of Labor Rate Hourly Labor Rate for Repairs: 2,500 Overhead Costs: 2,500 2,500 2,500 2,500 Rate Charged per Hour of Labor

Answer 1

G NO-0 Solution: Givey Dala: Ans trong Bike Rpair Shop Budgeted Cosl to year 2017. - Material Time Chorges $36,000 (oa dig chargs . shop Emplayee's wnges& Beuits patts Super viso'$ Slary &BeFits office Employee s SalaryBeuFits $10,000 10,000 $15000 19000 15,000 oves head Total Budhete d Cost $10,000 $45,000 - 2,500 Hours af Repair time in 2. 017 Areoboy Badgeted Profit5 and 15% The Estimated in voice Cost for paits to be urd in $15,000 yhours ConSume Estimote Hat ee job will of la bor and $200 in parls

NO- A) the la bar nate fon Am shen ike Rpair Shop for the yea 2017- Per Hour charge Computation af labor Rate Total Hour f To Tol Cost Hourly labor Rate fo Rpair Shop Emplayee waes & Bits 36,000 36,000/2500 over head Costs OFFice Emplayees waqesBenls 15000 overhea d 2,500 6 19,000 7.6 2500 Totod 70,000 3500 28 ProFit Margin 5 Rote charged per Hour 33 Rate Charged Pe Hour total+ ProFit margin G+ 80 33, chorged Ps Hour = 33. Rate

BThe Moterial tbadig chage Rceatage 2017 Hor Armstrong Bike Repair Shop for Compulation of Material (bading chage year mataid loaclig Peeatage oalerial lordhg Total invoice charge Cost, parls gralnial over head Cost Ports Super wso Salay 20 000 and Ber Fits Parts Enplaye Salay & BeneFits 10,000 30000/75000 Total 75,000 30,000 O.4X100 otfax over head 15,000 4000m 75,000 Total 60% profit margin 15 Total + Pofit margin Material load PeCntoge 75% Lad Prtatage 75% Material

NO c) Prepare A timeand malerial price Quotation for Fizing Ha Superior moulain Bike - Price Quath tion time material Amslrong Bike Ripain Shop Time &materil price Guo lation Job: Fix SuperioY moutain Bike (ux33) 132 La bor Charge 4 H @$33per tlour) Material Chaget: 200 Cost at parts aud malerial (200+150) 350 150 Material (oading price change Labor Charge t : Total pria of Labor and matrial material loading Chovge = 132+ 350 482 material = 482 Total price d labor §