Question

Sheridan Custom Electronics (SCE) 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 $165,300 - Parts manager's salary and benefits - $33,700 Office employee's salary and benefits 23,370 12,290 Other overhead 13,680 39,420 Total budgeted costs $202,350 $85,410 The company has budgeted for 5,700 hours of technician time during the coming year. It desires a $39 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 $657,000.Instructions (a) Compute the rate charged per hour of labor (b) Compute the material loading percentage. (c) RCE has just received a request for a bid from Buil Builders on a $1,200,000 new home. The company estimates that it would require 80 hours of labor and $40,000 of parts. Compute the total estimated bil.

Answer 1

A.)Labor rate = $74.50

B.)Material loading percentage= 93%

C.)Total estimated bill = $83,160

Step-by-step explanation:

TIME CHARGES:

Technicians' wages and benefits - $165,300

Parts manager salary and benefit -

Office employee's salary and benefit - 23,370

Other overhead - 13,680

Total budgeted costs $202,350

MATERIAL LOADING CHARGES:

Technicians' wages and benefits -

Parts manager salary and benefit - $33,700

Office employee's salary and benefit - 12,290

Other overhead - 39,420

Total budgeted costs - $85,410

A.)

Budgeted hours - 5700

Budgeted cost per labor hour = 202,350/5700 = $35.5

Add: profit margin = $39

Labor rate = $74.5

total invoice cost of parts and materials in 2020 will be = $657,000

Material loading charges = 85410/657000 = 0.13 = 13 %

Add: profit on parts = 80%

Material loading percentage = 93%

C.)

Estimated labor hours = 80

Material parts = $40,000

Labor charges = 80 * $74.5 = $5960

Material parts = $40,000

Material loading charges = 93% * 40000 = $37,200

Total estimated bill = $83,160