Question 3: Product Pricing [14 marks] Thermotech Heating Ltd installs heating systems in new homes. Jobs are priced using the time and material method. The managing director of Thermotech Heating is pricing a job involving the heating systems for six houses to be built by a local developer. His estimates follow: Labour hours 500.00 Material cost $ 76,000 The following predictions relate to the company's operations: Labour rate, including on-cost $ 27.00 per hour Annual labour hours 10,000.00 hours Annual overhead costs: Material handling and storage $ 48,450.00 Other overhead costs $ 142,000.00 Annual cost of materials used $ 323,000.00 Thermotech Heating adds a mark-up of $5.00 per hour on its time charges, and 20.00 percent on all material charges (including material handling and storage costs). Required: Question 3.1 Calculate (a) the company's time charges and the percentage of the material charges, then (b) calculate the price for the job. Show your workings. (8 marks) Your Answer: Time Charges Material Charges Price for the job Question 3.2 Apart from time and material charges, what are the other factors that may influence the pricing decision Explain. Word limit: 250 words. Note the word count at the end of your answer] (6 marks) Your Answer (expand the space as required): Word count = Question 4: Further Aspects of Budgeting and Variance Analysis [26 marks Question 3: Product Pricing [14 marks] Thermotech Heating Ltd installs heating systems in new homes. Jobs are priced using the time and material method. The managing director of Thermotech Heating is pricing a job involving the heating systems for six houses to be built by a local developer. His estimates follow: Labour hours 500.00 Material cost $ 76,000 The following predictions relate to the company's operations: Labour rate, including on-cost $ 27.00 per hour Annual labour hours 10,000.00 hours Annual overhead costs: Material handling and storage $ 48,450.00 Other overhead costs $ 142,000.00 Annual cost of materials used $ 323,000.00 Thermotech Heating adds a mark-up of $5.00 per hour on its time charges, and 20.00 percent on all material charges (including material handling and storage costs). Required: Question 3.1 Calculate (a) the company's time charges and the percentage of the material charges, then (b) calculate the price for the job. Show your workings. (8 marks) Your Answer: Time Charges Material Charges Price for the job Question 3.2 Apart from time and material charges, what are the other factors that may influence the pricing decision Explain. Word limit: 250 words. Note the word count at the end of your answer] (6 marks) Your Answer (expand the space as required): Word count = Question 4: Further Aspects of Budgeting and Variance Analysis [26 marks
