Ignatenko’s Custom Electronics (ICE) sells and installs complete security, compu
ID: 2446200 • Letter: I
Question
Ignatenko’s Custom Electronics (ICE) 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
$156,800
—
Parts manager’s salary and benefits
—
$37,962
Office employee’s salary and benefits
40,880
19,684
Other overhead
12,880
44,992
Total budgeted costs
$210,560
$102,638
The company has budgeted for $5,600 hours of technician time during the coming year. It desires a $39 profit margin per hour of labor and a 95% profit on parts. It estimates the total invoice cost of parts and materials in 2014 will be $703,000.
Compute the rate charged per hour of labor. (Round answer to 2 decimal places, e.g. 15.25.)
Rate charged per hour of labor
$
Compute the material loading percentage. (Round answer to 2 decimal places, e.g. 15.25%.)
Material loading percentage
%
ICE 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 $40,000.00 of parts. Compute the total estimated bill. (Round answer to 2 decimal places, e.g. 15.25.)
Total estimated cost
$
Time Charges
Material Loading Charges
Technicians’ wages and benefits
$156,800
—
Parts manager’s salary and benefits
—
$37,962
Office employee’s salary and benefits
40,880
19,684
Other overhead
12,880
44,992
Total budgeted costs
$210,560
$102,638
Explanation / Answer
a) Compute the rate charged per hour of labor. (Round answer to 2 decimal places, e.g. 15.25.)
Rate charged per hour of labor = Total budgeted costs/technician time + profit margin per hour
Rate charged per hour of labor = 210560/5600 + 39
Rate charged per hour of labor = $ 76.60
b) Compute the material loading percentage. (Round answer to 2 decimal places, e.g. 15.25%.)
Material loading percentage = Material Loading Charges/Total Estimated Cost of Material & Parts + Profit margin% on part
Material loading percentage = 102638/703000 + 95%
Material loading percentage = 109.60%
CE 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 $40,000.00 of parts. Compute the total estimated bill. (Round answer to 2 decimal places, e.g. 15.25.)
Total estimated cost =Cost of parts + Rate charged per hour of labor*No of Hour + Material loading percentage*Cost of Parts
Total estimated cost = 40000 + 76.60*80 + 109.6%*40000
Total estimated cost = $ 89968