Question

Question 2 Rey Custom Electronics (RCE) sells and installs complete security, computer, audio, and video systems for homes. On newly constructed homes it provides bids using time-and-material pricing. The following budgeted cost data are available. Time Charges Material Loading Charges Technicians' wages and benefits $140,700 Parts manager's salary and benefits Office employee's salary and benefits 30,820 Other overhead 18,760 Total budgeted costs $190,280 $33,200 19,300 45,000 $97,500 The company has budgeted for 6,700 hours of technician time during the coming year. It desires a $39 profit margin per hour of labor and an 80% profit on parts. It estimates the total invoice cost of parts and materials in 2020 will be $750,000.

1) Compute the labor rate per hour,

2) Compute the material loading percentage

3) Compute the total estimated bill,

Answer 1

Hourly labor rate for repairs Calculation (Total cost/Total hours) Rate per Hour Technician's wages and benefits 140,700/ 6,700 $21 Office employee's salary and benefits 30,820/ 6,700 $4.60 Other overhead 18,760/ 6,700 $2.80 Profit Margin $39 Rate charges per hour of labor $67.40 Overhead costs Calculation (Material Charges/Total Invoice Cost, Parts and Materials) Material Loading Charge Parts manager's salary and benefits 33,200/ 750,000 Office employee's salary and benefits 19,300/750,000 52,500 / 750,000 Other overhead 45,000/ 750,000 Profit Margin 80% Material loading charge 93% 3) Labor Charges 80 hours @ $67.40 per hour = $5,392 Material Charges Cost of parts and materials $43,900 Material loading charge (93% x $43,900) $40,827 Total price of labor and materials = $5,392 + $43,900 + $40,827 = $90,119