P11-3A
Hawks Electronic Repair Shop has budgeted the following time
and material for 2008.
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HAWKS
ELECTRONIC REPAIR SHOP
Budgeted
Costs for the Year 2008
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Time
Charges
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Material
Loading Charges
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Shop
employees’ wages and benefits
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$108,000
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—
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Parts
manager’s salary and benefits
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—
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$25,400
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Office
employee’s salary and benefits
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20,000
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13,600
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Overhead
(supplies, depreciation, advertising, utilities)
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26,000
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18,000
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Total
budgeted costs
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$154,000
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$57,000
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Hawks budgets 5,000 hours of repair
time in 2008 and will bill a profit of $5 per labor hour along with a 30%
profit markup on the invoice cost of parts. The estimated invoice cost for
parts to be used is $100,000.
On January 5, 2008 Hawks is asked to
submit a price estimate to fix a 72-inch big-screen TV. Hawks estimates that
this job will consume 20 hours of labor and $500 in parts.
Instructions
(a)
Compute the labor rate for Hawks Electronic Repair Shop for the year 2008.
(b)
Compute the material loading charge percentage for Hawks Electronic Repair Shop
for the year 2008.
(c)
Prepare a time-and-material price quotation for fixing the big-screen TV.
SOLUTION PREVIEW (The
Solution is done in EXCEL TEMPLATE)
PROBLEM
11-3A
(a)
Computation
of time charge rate
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Total
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Total
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Per Hour
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Cost
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÷
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Hours
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=
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Charge
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Hourly labor rate for repairs
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Shop employee’s wages
and benefits
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$108,000
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÷
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5,000
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=
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$21.60
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File name: P11-3A-Hawks-Elect.xls File
type: application/vnd.ms-excel
PRICE: $10
