Hawks Electronic Repair Shop has budgeted the following time and material for 2008.

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.

 

Instructions:

    (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.