Question

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	$126,500			-
	Parts manager's salary and benefits	-			$34,900
	Office employee's salary and benefits	25,300			15,710
	Other overhead	12,100			43,380
	Total budgeted costs	$163,900			$93,990

The company has budgeted for 5,500 hours of technician time during the coming year. It desires a $38 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 $723,000.

1. Compute the rate charged per hour of labor. (Round answer to 2 decimal places, e.g. 10.50.)

Labor rate

$

per hour

2. Compute the material loading percentage.

Material loading percentage

%

3.

RCE has just received a request for a bid from Buil Builders on a $1,208,000 new home. The company estimates that it would require 80 hours of labor and $39,600 of parts. Compute the total estimated bill.

Total estimated bill

$

Answer 1

Answer:
1)
Total Budgeted Cost	$ 163,900
/ Budgeted Hours	5,500 Hours
Budgeted cost per labor hour ( $ 163,900 / 5,500 )	$ 29.80
Add: Desired Profit margin	$ 38
Rate charged per hour of labor	$ 67.80

2)
Particulars	Amount (in $ )
Total Budgeted Cost	$ 93,990
/ Total Invoice Cost	$ 723,000
Material loading charges ( $ 93,990 / $ 723,000 )	13%
Add: Percentage of Profit on parts	80%
Material loading percentage %	93%

3)
Particulars	Amount (in $ )
Labor charges ( 80 hours x $ 67.80)	$ 5,424
Add: Parts	$ 39,600
Add: Material loading charges                ( $ 39,600 x 93% )	$ 36,828
Total Estimated bill	$ 81,852