Ronnie's Repair Company provides repair services for small engines and uses time and materials pricing....
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Accounting
Ronnie's Repair Company provides repair services for small engines and uses time and materials pricing. The company has budgeted the following costs for next year:
Mechanics' wages and benefits $900,000
Other repair costs, except for parts-related costs $450,000
Costs of ordering, handline, and storing parts 40% of invoice cost
In total, the company expects to have 50,000 hours of billable repair time next year. According to competitive conditions, the company believes it should aim for a profit of $8 per hour of each mechanic's time. The competitive markup on parts is 40% of invoice cost.
1. Compute the time rate and the materials loading charge that would be used to bill jobs.
2. One of the company's mechanics has just completed a repair job that required 12 hours of time and $100 in parts (invoice cost). Compute the amount that would be billed for the job.
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