Hawks Electronic Repair Shop has budgeted the following time and material for 2008.
HAWKS ELECTRONIC REPAIR SHOP
Budgeted Costs for the Year 2008
Time Charges Material Loading Charges
Shop employees’ wages and benefits $108,000 —
Parts manager’s salary and benefits — $25,400
Office employee’s salary and benefits 20,000 13,600
Overhead (supplies, depreciation, advertising, utilities 26,000 18,000
Total budgeted costs $154,000 $57,000
Hawks budgets 5,000 hours of repair time in 2008 and will bill a profit of $5 per labor hour along with a 30% profit markup on the invoice cost of parts. The estimated invoice cost for parts to be used is $100,000.
On January 5, 2008 Hawks is asked to submit a price estimate to fix a 72-inch big-screen TV. Hawks estimates that this job will consume 20 hours of labor and $500 in parts.
· (a) Compute the labor rate for Hawks Electronic Repair Shop for the year 2008.
· (b) Compute the material loading charge percentage for Hawks Electronic Repair Shop for the year 2008.
· (c) Prepare a time-and-material price quotation for fixing the big-screen TV.