Problem 8-3A Sutton’s Electronic Repair Shop has budgeted the following time and
ID: 2445564 • Letter: P
Question
Problem 8-3A
Sutton’s Electronic Repair Shop has budgeted the following time and material for 2017.
$55,000
Sutton’s budgets 5,000 hours of repair time in 2017 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, 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 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.)
Budgeted Costs for the Year 2017 Time Charges Material Loading Charges Shop employees’ wages and benefits $108,000 Parts manager’s salary and benefits $25,400 Office employee’s salary and benefits 23,500 13,600 Overhead (supplies, depreciation, advertising, utilities) 26,000 16,000 Total budgeted costs $157,500
$55,000
Sutton’s budgets 5,000 hours of repair time in 2017 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, 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 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.)
Explanation / Answer
Labour charges for 5000 budgeted labour hrs. Time charges 157500 Material loading charges 55000 Total 212500 Profit on labour @$10 for 5000 hrs. 50000 262500 Cost of parts for repair 100000 Mark-up @ 25% 25000 125000 Total budgeted revenue(5000 Lab. Hrs.) 387500 Labour rate/hr= $ 52.5 (42.5+10) Labour rate/hr. Time charges 31.5 Material loading charges 11 Total 42.5 Profit on labour @$10/hr. 10 52.5 Price estimate to fix 72-inch flat TV Labour @ 52.5*4 hrs. 210 Cost of parts 200 Mark-up@25% 50 250 Total estimated price 460