NY Temps, a large laborcontractor, supplies contract labor to construction companies. For 2020, NewYork Temps has budgeted to supply 87,000 hours of contract labor. Its variable costs are $8 perhour, and its fixed costs are $348,000. RogerMason, the generalmanager, has proposed acost-plus approach for pricing labor at full cost plus 25%.

1. Calculate the price per hour that NewYork Temps should charge based onMason's proposal.

2. The marketing manager supplies the following information on demand levels at differentprices:

Price per Hour

Demand (Hours)

$

13 127,000

15 100,000

16 87,000

17 79,000

18 67,000

NewYork Temps can meet any of these demand levels. Fixed costs will remain unchanged for all the demand levels. On the basis of this additionalinformation, calculate the price per hour that NewYork Temps should charge to maximize operating income.

3. Comment on your answers to requirements 1 and 2. Why are they the same ordifferent?