E8-9 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. Material
Time Loading
Charges 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 overhead 15,000 42,000 Total budgeted costs $193,000 $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 a 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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