Chapter 8, Problem 8.3AP

Sutton’s Electronic Repair Shop has budgeted the following time and material for 2017.

SUTTON’S ELECTRONIC REPAIR SHOP

Budgeted Costs for the Year 2017

		Material
	Time	Loading
	Charges	Charges
Shop employees' wages and benefits	$108,000	—
Parts managers salary' and benefits	—	$25,400
Office employee’s salary and benefits	23,500	13,600
Overhead (supplies, depreciation, advertising, utilities)	26,000	16,000
Total budgeted costs	$157,500	$55,000

Sutton’s budgets 5,000 hours of repair time in 2017 and will bill a profit of $10 per labor hour along with a 25% profit markup on the invoice cost of parts. The estimated invoice cost for parts to be used is $ 100,000.

On January 5, 2017, 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 4 hours of labor and $200 in parts.

Instructions

(a) Compute the labor rate for Sutton’s Electronic Repair Shop for the year 2017.

(b) Compute the material loading charge percentage for Sutton’s Electronic Repair Shop for the year 2017.

(c) Prepare a time-and-material price quotation for fixing the flat-screen TV.