Concept explainers
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 | $ 150,000 | — |
Parts manager’s salary and benefits | — | $34,000 |
Office employee’s salary and benefits | 30,000 | 15,000 |
Other |
15,000 | 42,000 |
Total budgeted costs | $195,000 | $91,000 |
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 2017 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.
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