E8-9 Rey Custom Electronics
(RCE) 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.
Material
(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 bill.
File name: E8-9 Rey Custom Electronics (RCE).docx File type: .docx PRICE: 8
Material
Time
Loading
Charges
Charges
Technicians’ wages and benefits $150,000 —
Technicians’ wages and benefits $150,000 —
Parts manager’s salary and
benefits — $34,000
Office employee’s salary and
benefits 30,000 15,000
Other overhead 15,000
42,000
Total budgeted costs $193,000 $91,000
Total budgeted costs $193,000 $91,000
The company has budgeted for 6,250 hours of technician time during the coming
year. It desires a $38 profit margin per hour of labor and a 80% profit on
parts. It estimates the total invoice cost of parts and materials in 2017 will
be $700,000.
Instructions
(a) Compute the rate charged per hour of labor.
(b) Compute the material loading
percentage. (a) Compute the rate charged per hour of labor.
(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 bill.
TUTORIAL PREVIEW
Computation of rate
charged per hour of labor
|
|
Calculation (Total
cost/ Total hours)
|
Rate per Hour
|
|
Technician’s wages and benefits
|
150,000/ 6,250
|
24
|
|
Office employee’s salary and benefits
|
30,000/ 6,250
|
4.80
|
|
Other overhead
|
15,000/
6,250
|
2.40
|
File name: E8-9 Rey Custom Electronics (RCE).docx File type: .docx PRICE: 8
