Question: Ronnie s Repair Company provides repair services for small engines and

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.


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  • CreatedJuly 08, 2015
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