Silver Spoon Service repairs commercial food preparation equipment. Thhe followi

Question

Silver Spoon Service repairs commercial food preparation equipment. Thhe following budgeled cost data is avalable for 2018: Time $500,000 112,000 Materiai Charmes Technicians' wages and benetits Parts managers salary and benefits Office manager's salary and benelits Other overhead Total budgeted costs 72.000 18,000 Silver Spoon has budgeted for 10,000 hours of technician time during the coming year. t desires a S64 profit margin per hour of labor anda 50% profit margin on parts. Siver Spon est maas te total invoice cost of parts and materials in 2018 will be $500,000 Instructions 1. Compute the rate charged per hour of labor. 2. Compute the material loading charge. 3. Silver Spoon has received a request from Lime Corporation for an estimate to repair a commercial fryer. The comparny estimates that it would take 20 hours of labor and $8,000 of parts. Compute the total estimated bin

Explanation / Answer

1 Total Cost Total Hours Per hour Charge Hourly labor rate for repairs Technicians’ wages and benefits 500000 / 10000 50 Overhead costs Office manager’s salary and benefits 112000 / 10000 11.2 Other overhead 48000 / 10000 4.8 660000 30000 66 Profit margin 64 Rate charged per hour of labor 130 2 Material Charges Total Invoice Cost,Loading Parts and materials Material Charge Overhead costs Parts manager’s salary and benefits 72000 Office manager’s salary and benefits 18000 90000 / 500000 = 18% Other overhead 135000 / 500000 = 27% 45% Profit margin 50% Material loading charge 95% 3 Labor charges 2600 20hours @ 130$ Material charges Cost of parts and materials 8000 Material loading charge (95% × $8,000) 7600 15600 Total price of labor and materials 18200

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