Super Heating Ltd installs heating system in new homes. Jobs are priced using the time and materials method. The managing director of Super Heating is pricing a job involving the heating systems for six houses to be built by a local developer. His estimated follow:

Labour hours ......................................... 400

Material cost ......................................... $150 000

The following predictions relate to the company's operations:

Labour rate, including on-cost ......................................... $40 per hour

Annual labour hours .................................................... 12 000 hours

Annual overhead cost:

Material handling and storage ......................................... $62 500

Other overhead cost .................................................... 270 000

Annual cost of materials used ......................................... 625 000

Required:

Super Heating adds a markup of too costs. per hour on its time charges, but there is no markup on material

1. Develop formulas for:

(a) Company's time charges.

(b) Company's material charges.

2 Calculate the price for the job described above.

3 What would be the price of the job if Super Heating also added a markup of 10 per cent on all material charges (including material handling and storage costs)?