Greg's Auto Repair uses time and material pricing. The following costs for repairs and parts have been budgeted for the coming year:

Repairs

Parts

Mechanic's wages

$200,000

Service Manager salary

50,000

Parts manger salary

$36,000

Clerical assistant salary

18,000

15,000

Retirement Insurance

20% of salaries and wages

53,600

8,160

Supplies

1,200

540

Utilities

36,000

20,800

Property Taxes

8,400

1,900

Depreciation

76,800

37,600

Invoice cost of parts used

300,000

Total budged cost

$444,000

$420,000

The company expects to bill customers for 16,000 hours of repair time. A profit of $7 per hour of repair time is considered to be feasible. A target profit of 15% of the invoice cost of parts in used.

Required:

a.Compute the billing rate for the mechanics in the repair service department and the material loading charge that would be used to bill jobs.(8 Marks)

Billing rate per hour for Mechanics (Split the billing rate into three parts):(5)

Material Loading Charge Markup: Show Calculations (3)

b.Calculate the cost of a job to repair a 2005 Honda Accord that will consume 4 hours of labour time and require $500 in parts and materials at cost.(1)