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Exercise M-9 (Part Level Submission)

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Exercise M-9 (Part Level Submission)

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 $147,481 -        Parts manager's salary and benefits -        $33,400 Office employee's salary and benefits 26,646 16,790 Other overhead 15,911 40,726 Total budgeted costs $190,038 $90,916
The company has budgeted for 6,390 hours of technician time during the coming year. It desires a $37.68 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 $717,000.

(a)

Your answer is correct. Compute the rate charged per hour of labor. (Round answer to 2 decimal places, e.g. 10.50.)
Labor rate $

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(b)

Compute the material loading percentage. (Round answer to 2 decimal places, e.g. 10.50.)
Material loading percentage

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Explanation / Answer

a.

b.

Time charges per hour ($190038/ 6390) $29.74 Add profit margin 37.68 Labor rate $67.42 per hour

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