Labor billing rate computation Sam and Janet work for Grimlet Security Company. Janet is a master locksmith and earns $10 per hour. Sam is a journeyman locksmith and earns $8 per hour. They each work 40 hours per week. During the first week of May, Janet worked 20 hours installing locks on a new office building and 16 hours on service calls. The remaining four hours she spent on miscellaneous tasks such as store and equipment maintenance. Sam worked 14 hours on the same office building and handled service calls 18 hours. He spent the remaining 8 hours waiting on customers, setting up display cases, and performing other miscellaneous tasks. The week is considered typical for both employees.

Grimlet Security Company pays $6 per week for accident and life insurance for each of its employees. Also it pays $5 a week into an education and training fund since it must periodically provide its employees with training on new developments in the security industry. The company also pays 7 percent FICA tax, and 13 percent of gross pay into a retirement fund. In order to cover administrative and other operating expenses, the company must charge 160 percent of its employ- ees actual direct labor cost for service calls.

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REQUIRED a. Compute the direct labor cost to be assigned to new lock installations and also to the service calls. b. Compute the cost to be assigned to overhead this week for Sam and Janet's work. c. Compute the total hourly cost of employing Sam and Janet and also the total hourly cost of their direct labor if all costs are included in the computations. d. How much should the company bill its customers for service calls performed by Sam and Janet? e. Compute a single billing rate for Sam and Janet's service calls, using their individual rates weighted by the time they spend on service calls.