Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Required 13-31 Cost-plus and market-based pricing. Georgia Temps, a large labor contractor, supplies contract labor to building construction companies. For 2017, Georgia Temps has budgeted
Required 13-31 Cost-plus and market-based pricing. Georgia Temps, a large labor contractor, supplies contract labor to building construction companies. For 2017, Georgia Temps has budgeted to supply 84,000 hours of contract labor. Its variable costs are $13 per hour, and its fixed costs are $168,000. Roger Mason, the gen- eral manager, has proposed a cost-plus approach for pricing labor at full cost plus 20%. 1. Calculate the price per hour that Georgia Temps should charge based on Mason's proposal 2 The marketing manager supplies the following information on demand levels at different prices: Price per Hour Demand (Hours) $16 124,000 17 104,000 18 84,000 19 74,000 20 61,000 Georgia Temps can meet any of these demand levels. Fixed costs will remain unchanged for all the demand levels. On the basis of this additional information, calculate the price per hour that Georgia Temps should charge to maximize operating income. 3. Comment on your answers to requirements 1 and 2. Why are they the same or different
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started