Question

Question 17 Sutton’s Electronic Repair Shop has budgeted the following time and material for 2017. SUTTON’S ELECTRONIC REPAIR SHOP Budgeted Costs for the Year 2017 Time Charges Material Loading Charges Shop employees’ wages and benefits $ 105,456 ― Parts manager’s salary and benefits ― $ 25,400 Office employee’s salary and benefits 19,056 17,650 Overhead (supplies, depreciation, advertising, utilities) 22,752 19,950 Total budgeted costs $ 147,264 $ 63,000 Sutton’s budgets 4,800 hours of repair time in 2017 and will bill a profit of $ 11 per labor hour along with a 24 % profit markup on the invoice cost of parts. The estimated invoice cost for parts to be used is $ 105,000 . On January 5, 2017, Sutton’s is asked to submit a price estimate to fix a 72-inch flat-screen TV. Sutton’s estimates that this job will consume 9 hours of labor and $ 320 in parts.

Compute the labor rate for Sutton’s Electronic Repair Shop for the year 2017. (Round answer to 2 decimal places, e.g. 10.50.) Labour rate $ per hour

Compute the material loading charge percentage for Sutton’s Electronic Repair Shop for the year 2017. Material loading percentage %

Calculate the time-and-material price quotation for fixing the flat-screen TV. (Round answer to 2 decimal places, e.g. 10.50.) Total price of labor and material $

2) North Division has the following information:

Sales	$1100000
Variable expenses	630000
Fixed expenses	620000

If this division is eliminated, the fixed expenses will be allocated to the company’s other divisions. What is the incremental effect on net income if the division is dropped?

$150000 increase

$480000 increase

$470000 decrease

$620000 decrease

Answer 1

1)	Rate charged per hour of labor
					time	budgeted	rate
					charges=a	hrs=b	c=a/b
	shop employee wages & benefits				105,456	4,800	21.97
	office employee salary & benefits				19,056	4,800	3.97
	other overhead				22,752	4,800	4.74
	total budgeted costs				147,264	4,800	30.68
	Add:Profit margin						11.00
							72.36	Rate charged per hr hour
	Answer=	$72.36
2)	Material loading percentage
					material	total	%
					loading	invoice
					charges	cost
					A	B	c=a/b*100
	parts managers&office employees salary				43050	105,000	41.00%
	other overhead				19,950	105,000	19.00%
	total percentage				63000		60.00%
	add:profit margin						24%
	material loading percentage						84.00%
	Answer -	84.00%	answer
3)	Total Estimated bill
	labor charges		9 hours *72.36				651.24
	Material charges:
	cost of material parts					320
	material loading charges			(320*84%)		268.8	588.80
	total price of labor and material						1240.04	answer

	Contribution lost				-470000
	saving fixed expenses				0
	net increase in income				-470000
	$470,000	Decrease