Question

Sutton's Electronic Repair Shop has budgeted the following time and material for 2020. SUTTON'S ELECTRONIC REPAIR SHOP Budgeted Costs for the Year 2020 Time Charges Material Loading Charges $108,000 Shop employees' wages and benefits Parts manager's salary and benefits Office employee's salary and benefits Overhead (supplies, depreciation, advertising, utilities) Total budgeted costs 23,500 $25,400 13,600 16,000 $55,000 26,000 $157,500 Sutton's budgets 5,000 hours of repair time in 2020 and will bill a profit of $10 per labor hour along with a 25% profit markup on the invoice cost of parts. The estimated invoice cost for parts to be used is $100,000. On January 5, 2020, 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 4 hours of labor and $200 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.)

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

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

Answer 1

SOLUTION

1.

	Time Charges (A)	Total hours (B)	Per hour charge (A/B)
Shop employees’ wages and benefits	108,000	5,000	21.60
Office employee’s salary and benefits	23,500	5,000	4.70
Overhead (supplies, depreciation, advertising, utilities)	26,000	5,000	5.20
Total budgeted costs	157,500	5,000	31.50
Profit margin			10.00
Labor rate charge per hour			41.50

2.

	Material loading charges (A)	Total invoice cost, parts and material (B)	Per hour charge (A/B)
Parts manager’s salary and benefits	25,400	100,000	25.40%
Office employee’s salary and benefits	13,600	100,000	13.60%
Overhead (supplies, depreciation, advertising, utilities)	16,000	100,000	16.00%
Total budgeted costs	55,000	100,000	55.00%
Profit margin			25.00%
Material loading percentage			80.00%

3.

Labor charge (4 hours* $41.50 per hour)	166
Cost of parts and material	200
Material loading charge (200*80%)	160
Total price for labor and material	526