Question

Exercise 22-9 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. Material Loading Charges Charges Technicians' wages and benefits Parts manager's salary and benefits Office employee's salary and benefits Other overhead Total budgeted costs 34,700 10,800 15,37337,635 $164,186 83,135 Time 125,642 23,171 The company has budgeted for 5,530 hours of technician time during the coming year. It desires a $ 37.44 profit margin per hour of labor and an 80% profit on parts. It estimates the total invoice cost of parts and materials in 2017 will be $ 650,000 . Compute the rate charged per hour of labor. (Round answer to 2 decimal places, e.g. 10.5o.) Labor rates per hour

Answer 1

1	Rate charged per hour of labor:
				Total Cost	/	Total Hours	=	Per hour Charger
	Technician's wages and benefits			125642		5530		22.72
	Office employee's salaries and benefits			23171		5530		4.19
	Other overhead			15373		5530		2.78
	Total							29.69
	Profit							37.44
	Rate charged per hour of labor							67.13
2	Material loading percentage:
				Material Loading charges	/	Total invoice cost	=	Material Loading Percentage
	Parts managers's salaries and benefits			34700
	Office employee's salaries and benefits			10800
	Other overhead			37635
	Total			83135		650000		12.79%
	Profit margin							80%
	Material loading percentage							92.79%
3	Quotation:
	Labor charges		(80*67.13)			5370.4
	Material charges
	Cost of parts and materials			35900
	Material loading charge (35900*92.79%)			33311.61		69211.61
	Total price of labor and material					74582.01