1. The material loading charge is 40%.
2. The client's bill that takes 20 hours of consulting time and $180 of materials will be $1,100.
Data and Calculations:
Consultants’ wages = $90,000
Fringe benefits = $22,500
Related overhead = $17,500
Total consultants' $130,000
Profit margin per hour = $20
Total profit on consultant's
expenses = $100,000 ($20 x 5,000)
Total revenue = $230,000
Charges per hour = $46 ($230,000/5,000)
Supply clerk’s wages = $18,000
Fringe benefits = $4,000
Related overhead = $20,000
Clerks' expenses = $42,000
Profit margin on materials = $25,200
Total loading charge = $67,200
Material loading charge = Total loading charge/Total material costs x 100
= 40% ($67,200/$168,000 x 100)
Profit margin on materials = 15%
= $25,200 ($168,000 x 15%)
Total estimated consulting hours 5,000
Total estimated material costs = $168,000
Bill for a client:
20 hours of consulting time = $920 (20 x $46)
Cost of materials = $180
Total bill = $1,100 ($920 + $180)
Thus, the bill for the client is $1,100.
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Based on the information given, it can be noted that the material loading charge will be 40%.
The total consultant is given as:
= $90000 + $22500 + $17500
= $130000
Expenses = $100,000.
Total revenue = $230,000
The material loading charge will be calculated thus:
= Total loading charge / Total material cost × 100
= 68200/16800 × 100
= 40%
Also, the clients bill will be calculated thus:
= (20 × $46) + $180
= $920 + $180
= $1100
Therefore, the bill is $1100.
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