Ignatenko’s Custom Electronics (ICE) sells and installs complete security, compu
ID: 2469909 • 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 $126,000 — Parts manager’s salary and benefits — $37,785 Office employee’s salary and benefits 35,400 15,114 Other overhead 13,200 38,472 Total budgeted costs $174,600 $91,371 The company has budgeted for $6,000 hours of technician time during the coming year. It desires a $37 profit margin per hour of labor and a 85% profit on parts. It estimates the total invoice cost of parts and materials in 2014 will be $687,000.
Compute the rate charged per hour of labor.
Compute the 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 $40,000.00 of parts. Compute the total estimated bill.
Explanation / Answer
Particulars Time Charges Material Loading Charges Technicians’ wages and benefits 126000 0 Parts manager’s salary and benefits 0 37785 Office employee’s salary and benefits 35400 15114 Other overhead 13200 38472 Total budgeted costs 174600 91371 Add: Profit margin Per direct Labour hour (6000 hours * 37) 222000 Total Invoice Price - A 396600 Total budgeted Labour Hour - B 6000 Rate to be charges for Per labour Hour (A/B) 66.10 Q-2) Total Mataerial Loading Charges 91371 Total Invoice cost of partts and material 687000 Material Loading Percentage on taol cost of parts 13.30 Q-3) Total Estimated Bill Particulars Amount ($) Amount ($) Total Labour Hours Required 80 Hours Rate Per Hour $66.10 Total Labour Cost $5,288.00 Part Cost estimated 40000 ADD: Desired Profit @ 85 % 34000 ADD: Material Loading charges cost as percentage on total Invoice cost 9842 (40000+34000) * 13.3% Total Parts cost Includig loading charges 83842 Total Cost of Estimated Bill $89,130.00