Question

Ronnie’s Repair Company provides repair services for small engines and uses time and materials pricing. The company has budgeted the following costs for next year:
Mechanics’ wages and benefits. . . . . . . . . . . . . . . . . . . . . . . . . $900,000
Other repair costs, except for parts-related costs . . . . . . . . . . . . $450,000
Costs of ordering, handling, and storing parts. . . . . . . . . . . . . . 40% of invoice cost
In total, the company expects to have 50,000 hours of billable repair time next year. According to competitive conditions, the company believes it should aim for a profit of $8 per hour of each mechanic’s time. The competitive markup on parts is 40% of invoice cost.
Required:
1. Compute the time rate and the materials loading charge that would be used to bill jobs.
2. One of the company’s mechanics has just completed a repair job that required 12 hours of time and $100 in parts (invoice cost). Compute the amount that would be billed for the job.


$1.99
Sales1
Views75
Comments0
  • CreatedJuly 08, 2015
  • Files Included
Post your question
5000