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.

The company has budgeted for 6,250 hours of technician time during the coming year. It desires a $38 profit margin per hour of labor and an 80% profit on parts. It estimates the total invoice cost of parts and materials in 2020 will be $700,000.

Instructions

a. Compute the rate charged per hour of labor.

b. Compute the material loading percentage.

c. RCE has just received a request for a bid from Buil Builders on a $1,200,000 new home. The company estimates that it would require 80 hours of labor and $40,000 of parts. Compute the total estimated bill.

Transcribed Image Text:

Time Material Charges Loading Charges |Technicians' wages and benefits Parts manager's salary and benefits Office employee's salary and benefits 30,000| Other overhead Total budgeted costs |$150,000| $34,000 15,000 42,000 15,000 $195,000 $91,000