Answered: Compute the labor rate for Sutton’s…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sutton’s Electronic Repair Shop has budgeted the following time and material for 2020.

SUTTON’S ELECTRONIC REPAIR SHOP Budgeted Costs for the Year 2020
	Time Charges	Material Loading Charges
Shop employees’ wages and benefits	$118,800		―
Parts manager’s salary and benefits	―		$25,400
Office employee’s salary and benefits	20,520		13,990
Overhead (supplies, depreciation, advertising, utilities)	28,080		20,200
Total budgeted costs	$167,400		$59,590

Sutton’s budgets 5,400 hours of repair time in 2020 and will bill a profit of $14 per labor hour along with a 21% profit markup on the invoice cost of parts. The estimated invoice cost for parts to be used is $101,000.

On January 5, 2020, Sutton’s is asked to submit a price estimate to fix a 72-inch flat-screen TV. Sutton’s estimates that this job will consume 9 hours of labor and $300 in parts.

(a)

Compute the labor rate for Sutton’s Electronic Repair Shop for the year 2020. (Round answer to 2 decimal places, e.g. 10.50.)

Labour rate

per hour

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