Exercise 22-9 Rey Custom Electronics (RCE) sells and installs complete security,

Question

Exercise 22-9 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 Loading Charges Charges Technicians' wages and benefits Parts manager's salary and benefits Office employee's salary and benefits Other overhead Total budgeted costs 34,700 10,800 15,37337,635 $164,186 83,135 Time 125,642 23,171 The company has budgeted for 5,530 hours of technician time during the coming year. It desires a $ 37.44 profit margin per hour of labor and an 80% profit on parts. It estimates the total invoice cost of parts and materials in 2017 will be $ 650,000 . Compute the rate charged per hour of labor. (Round answer to 2 decimal places, e.g. 10.5o.) Labor rates per hour

Explanation / Answer

1 Rate charged per hour of labor: Total Cost / Total Hours = Per hour Charger Technician's wages and benefits 125642 5530 22.72 Office employee's salaries and benefits 23171 5530 4.19 Other overhead 15373 5530 2.78 Total 29.69 Profit 37.44 Rate charged per hour of labor 67.13 2 Material loading percentage: Material Loading charges / Total invoice cost = Material Loading Percentage Parts managers's salaries and benefits 34700 Office employee's salaries and benefits 10800 Other overhead 37635 Total 83135 650000 12.79% Profit margin 80% Material loading percentage 92.79% 3 Quotation: Labor charges (80*67.13) 5370.4 Material charges Cost of parts and materials 35900 Material loading charge (35900*92.79%) 33311.61 69211.61 Total price of labor and material 74582.01

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