Question: Super Heating Ltd installs heating system in new homes. Jobs are priced using the time and materials method. The managing director of Super Heating is
Super Heating Ltd installs heating system in new homes. Jobs are priced using the time and materials method. The managing director of Super Heating is pricing a job involving the heating systems for six houses to be built by a local developer. His estimated follow:
Labour hours ......................................... 400
Material cost ......................................... $150 000
The following predictions relate to the company's operations:
Labour rate, including on-cost ......................................... $40 per hour
Annual labour hours .................................................... 12 000 hours
Annual overhead cost:
Material handling and storage ......................................... $62 500
Other overhead cost .................................................... 270 000
Annual cost of materials used ......................................... 625 000
Required:
Super Heating adds a markup of too costs. per hour on its time charges, but there is no markup on material
1. Develop formulas for:
(a) Company's time charges.
(b) Company's material charges.
2 Calculate the price for the job described above.
3 What would be the price of the job if Super Heating also added a markup of 10 per cent on all material charges (including material handling and storage costs)?
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