Question

Practice Problem 1 Sutton's Electronic Repair Shop has budgeted the following time and material for 2020. SUTTON'S ELECTRONIC REPAIR SHOP Budgeted Costs for the Year 2020 Time Charges Material Loading Charges Shop employees' wages and benefits $101,050 Parts manager's salary and benefits $25,400 Office employee's salary and benefits 20,210 17,650 Overhead (supplies, depreciation, advertising, utilities) 24,440 16,800 Total budgeted costs $145,700 $59,850 Sutton's budgets 4,700 hours of repair time in 2020 and will bill a profit of $14 per labor hour along with a 26% profit markup on the invoice cost of parts. The estimated invoice cost for parts to be used is $105,000. On January 5, 2020, Sutton's is asked to submit a price estimate to fix a 72-inch flat-screen TV. Sutton's estimates that this job will consume 4 hours of labor and $400 in parts. Compute the labor rate for Sutton's Electronic Repair Shop for the year 2020. (Round answer to 2 decimal places, e.g. 10.50.) Labour rate per hour Compute the material loading charge percentage for Sutton's Electronic Repair Shop for the year 2020. Material loading percentage Calculate the time-and-material price quotation for fixing the flat-screen TV. Total price of labor and material Click if you would like to Show Work for this question: Open Show Work

Answer 1

Answer -

Step - (1) - Computation of Labor rate per hour for Sutton's Electronic Repair Shop for the year 2020.

Particulars	Calculations / Remarks
Total time charges	Given in question	$145700
Desired profit = [Repair time * Profit per labor hour]	[4700 hours * $14 per labor hour	$65800
Total	[$145700 + $65800]	$211500
Estimated direct labor hours	Given in question	4700 hours
Labor rate per hour	[$211500 / 4700 hours]	45 per hour

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Step - (2) - Computation of Material loading charge percentage for Sutton's Electronic Repair Shop for the year 2020.

Particulars	Calculations / Remarks
Direct materials cost	Given in question	$105000
Total materials loading charges	Given in question	$59850
Materials markup	[$105000 * 26%]	$27300
Material loading percentage	[($59850 + $27300) / $105000] * 100	83%

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Step - (3) - Computation of time-and-material price quotation for fixing the flat-screen TV.

Particulars	Calculations / Remarks
Labor charges	[4 hours * 45 per hour]	$180
Parts	Given in question	$400
Materials loading charges	[$400 * 83%]	$332
Total price of labor and material	[$180 + $400 + $332]	$912