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b. The materials loading charge that would be used in billing jobs. The materials loading charge should be expressed as a percentage of the
b. The materials loading charge that would be used in billing jobs. The materials loading charge should be expressed as a percentage of the invoice cost. Total materials loading bill Total materials loading charge % 2. Assume that the company adopts the rates that you have computed in (1) above. What should be the total price charged on a repair job that requires six hours of service time and parts with an invoice cost of $500? Total price of the job Computer Repair Inc. uses time and materials pricing, and each year it reviews its rates in light of the actual costs incurred in the prior year. Actual costs incurred last year in connection with repair work and in connection with the company's parts inventory are shown below: Customers were billed for 20,000 hours of repair work last year. The company has a target profit of $10 per hour of repair service time and a target profit of 40% of the invoice cost of parts used. During the past year, the company billed repair service time at $50 per hour and added a materials loading charge of 40% to parts. Management feels these rates may now be inadequate, since costs have risen somewhat over the last year. Repair technicians-wages Repairs $480,000 Parts Repair service manager-salary 56,000 Parts manager-salary $ 60,000 Repairs and parts assistant-salary 28,800 7,500 Retirement benefits (20% of salaries and wages) 112,960 13,500 Health insurance (5% of salaries and wages) 28,240 3,375 Utilities Truck operating costs Property taxes Liability and fire insurance Supplies Rent-building Depreciation-trucks and equipment Invoice cost of parts used Total costs for the year 120,000 24,000 19,200 9,280 5,400 6,720 3,000 1,200 225 38,400 33,000 59,200 600,000 $960,000 $750,000 Required: 1. Using the above data, compute the following: a. The rate that would be charged per hour of repair service time using time and materials pricing. Cost of repair service time Cost of materials pricing per hour per hour
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