Armstrong Bike Repair Shop has budgeted the following time and material for 2014.

Armstrong budgets 2,500 hours of repair time in 2014 and will bill a profit of $5 per labor hour along with a 15% profit markup on the invoice cost of parts. The estimated invoice cost for parts to be used is $75,000.
On January 5, 2014, Armstrong is asked to submit a price estimate to fix a Superior Mountain bike. Armstrong estimates that this job will consume 4 hours of labor and $200 in parts.

Instructions
(a) Compute the labor rate for Armstrong Bike Repair Shop for the year 2014.
(b) Compute the material loading charge percentage for Armstrong Bike Repair Shop for the year 2014.
(c) Prepare a time-and-material price quotation for fixing the Superior Mountainbike.

Transcribed Image Text:

Armstrong Bike Repair Shop Budgeted Costs for the Year 2014 Time Charges $36,000 Material Loading Charges Shop employees' wages and benefits Parts supervisors salry and benefits Office employees salary and benefits Overhead (supplies, depreciation, advertising, utilities) Total budgeted costs 15,000 19,000 $70,000 $20,000 10,000 15,000 $45,000