question archive Exercise 23-15 Time and materials pricing A1 HH Auto Repair reports the following information for the coming year
Exercise 23-15 Time and materials pricing A1 HH Auto Repair reports the following information for the coming year
Subject:AccountingPrice:2.87 Bought7
Exercise 23-15 Time and materials pricing A1
HH Auto Repair reports the following information for the coming year.
Labor rate, including fringe benefits $ 43 per labor hour
Annual labor hours 10,700 hours
Annual materials (parts) purchases $2,070,000
Annual overhead costs:
Materials purchasing, handling, and storage $ 289,800
Other overhead (depreciation, insurance, taxes, rent) $171,200
Target profit margin (on both labor and materials) 30 %
1. Compute the price (rate) per hour of direct labor. (Round your answer to 2 decimal places.)
2. Compute the materials markup (in 36).
3. What price should the company quote for a job requiring ?ve labor hours and $650 in parts? (Round your answer to 2 decimal places.)
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Answer:
Calculate the required amounts as follows:
1Total labor rate per hour $63.80
2Materials markup 44%
3Total price quote $1631.50
Above figures have been calculated in the following manner:
1 Total labor rate per hour = (43+(171,200/10,700))*1.30
2 Materials markup = (289,800/20,70,000)+0.30
3 Total price quote = {(63.80*5)+(650*1.44)} * 1.30
