Happy Homes is a house cleaning service. As a special feature, Happy Homes will supply flowers or small decorator items when they clean a home. They use a time and material billing policy. Based on the following costs and desired profits, calculate the hourly rate for labour and the material loading charge for Happy Homes, assuming that in 4,000 hours per year they clean 800 homes. Invoice costs per year are $200,000.

 

Required:

A. Calculate the labour rate that Happy Homes uses.

B. Calculate the materials loading charge for Happy Homes.

C. Cathy, a potential new client, would like to have her home cleaned every two weeks and a large floral arrangement to be provided for the dining room table and a small arrangement for the kitchen table. Happy Homes estimates that it will take 2 maids 4 hours to clean Cathy€™s home and the invoice cost for the flowers will be $55. Using the rates calculated in Parts A and B, determine Cathy€™s bi-weekly bill.

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Labour Materials $60,000 Maids' salaries Office supplies $18,000 $18,000 $24,000 Supplies $ 5,000 $ 3,000 Overhead on equipment Advertising costs $10 per hour Desired profit 20%