Armstrong Bike Repair Shop has budgeted the following time and material for 2017.

Armstrong budgets 2,500 hours of repair time in 2017 and will bill a profit of $5 per labor hour along with a 15% profit markup on the invoice cost of parts. The estimated invoice cost for parts to be used is $75,000.

On January 5, 2017, Armstrong is asked to submit a price estimate to fi x a Superior Mountain bike. Armstrong estimates that this job will consume 4 hours of labor and $200 in parts.

Instructions

(a) Compute the labor rate for Armstrong Bike Repair Shop for the year 2017.

(b) Compute the material loading charge percentage for Armstrong Bike Repair Shop for the year 2017.

(c) Prepare a time-and-material price quotation for fixing the Superior Mountain bike.

Armstrong Bike Repair Shop Budgeted Costs for the Year 2017 Time Charges Material Loading Charges $36,000 Shop employees' wages and benefits Parts supervisor's salary and benefits Office employee's salary and benefits Overhead (supplies, depreciation, advertising, utilities) Total budgeted costs 15,000 19,000 $70,000 $20,000 10,000 15,000 $45,000 Total Cost Total Hours Per Hr Chge (a) Computation of Labor Rate Hourly Labor Rate for Repairs: Shop Employee Wages & Benefits Overhead Costs: Office Employee Wages & Benefits 36,000 2,500 14.4 15,000 19,000 7.6 2,500 2,500 2,500 2,500 70,0000 Rate Charged per Hour of Labor (b) Computation of Material Loading Charge Material Loading Charge Total Invoice Cost, Parts & Materials Material Loading Percentage Overhead Costs: | Parts Supervisor Salary & Benefits Parts Employee Salary & Benefits 20,000 10,000 40% 30,000 15,000 75,000 75,000 20% 60% Other Overhead Total Profit Margin Material Loading Percentage 15% 75% (c) Price Quotation for Time & Material Armstrong Bike Repair Shop Time & Material Price Quotation Job: Fix Superior Mountain Bike Labor Charge: Material Charges: Cost of Parts & Materials Material Loading Charge Total Price of Labor & Material