Compute the labor rate for armstrong bike repair shop

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Reference no: EM13888833

Armstrong Bike Repair Shop has budgeted the following time and material for 2014.

Armstrong Bike Repair Shop Budgeted Costs for the Year 2014

 Material

Time Charges

Loading Charges

Shop employees' wages and benefits Parts supervisor's salary and benefits

$36,000

$20,000

Office employee's salary and benefits

15,000

10,000

Overhead (supplies, depreciation, advertising, utilities)

19,000

15,000

Total budgeted costs

$70,000

$45,000

Armstrong budgets 2,500 hours of repair time in 2014 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, 2014, Armstrong is asked to submit a price estimate to fix 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 2014.

(b) Compute the material loading charge percentage for Armstrong Bike Repair Shop for the year 2014.

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

Reference no: EM13888833

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