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Armstrong Bike Repair 2500

Price: $2.50

Armstrong Bike Repair Shop has budgeted the following time and material for 2014.
Armstrong Bike Repair Shop
Budgeted Costs for the Year 2014
Time Charges Material Loading Charges
Shop employees' wages and benefits   36,000  - 
Parts manager's salary and benefits   -   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.

(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.

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