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Yelk Garage uses time and materials pricing. It is setting prices for next year using the following information:

Labor rate, including fringe benefits	$	62	per hour
Annual labor hours		3,050	hours
Annual materials purchases	$	835,000
Materials purchasing, handling, and storage	$	50,100
Overhead for depreciation, taxes, insurance, etc.	$	79,300
Target profit margin for both labor and materials		25	%

What should Yelk set as the materials markup per dollar of materials used?

Multiple Choice

• 31%.

• 6%.

• 25%.

• 43%.

• 37%.