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
Shop employees’ wages and benefits		$105,500				―
Parts manager’s salary and benefits		―				$25,400
Office employee’s salary and benefits		21,500				15,600
Overhead (supplies, depreciation, advertising, utilities)		28,000				20,000
Total budgeted costs		$155,000				$61,000

Sutton’s budgets 5,000 hours of repair time in 2020 and will bill a profit of $11 per labor hour along with a 29% 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 6 hours of labor and $400 in parts.

1. Compute the labor rate for Sutton’s Electronic Repair Shop for the year 2020

2.compute the material loading charge percentage for Sutton's electronic repair shop for the year 2020.

3. Calculate the time- and- material price quotation for fixing the flat- screen tv.

Answer 1

1.

	Time charges	Budgeted hrs	Rate
shop employee wages & benefits	105500	5000	21.10
office employee salary & benefits	21500	5000	4.30
other overhead	28000	5000	5.60
total budgeted costs	155000	5000	31
Add: Profit			11
Rate charged per hour			42

2.

	Material loading charges	Total invoice cost	%
parts managers &office employees salary	41000	100000	41%
other overhead	20000	100000	20%
total percentage	61000		61%
add:profit margin			29%
material loading percentage			90%

3.

Labor charges [6hrs x 42]		252
Material charges:
cost of material parts	400
material loading charges [400 x 90%]	360	760
total price of labor and material		1,012