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

Question

Exercise M-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 Time Charges Material Loading Charges Technicians' wages and benefits $145,292 Parts manager's salary and benefits Office employee's salary and benefits 27,562 Other overhead Total budgeted costs $34,100 6,160 41,401 $188,417 81,661 15,563 The company has budgeted for 5,940 hours of technician time during the coming year. It desires a $38.88 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 $671,000 Compute the rate charged per hour of labor. (Round answer to 2 decimal places, e.g. 10.50.) Labor rate s per hour

Explanation / Answer

1)Labor rate per Hours = cost per hour +Profit margin

        =[188417/5940]+38.88

       = 31.72+38.88

         = $ 70.60 per hour

2)Total cost per part :81661/671000 = .1217 or12.17%

Material load percentage : Total cost %+ margin%

               = 12.17%+80%

                 = 92.17%

3)Total estimated bill :

Labor charges [70.6*80] 5648 Material charges Cost of parts 36700 Material loading % [.9217*36700] 33826.39 Total estimated bill 76174.39

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