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Ronnies repair company provides repair services for small


EXERCISE 12A-3 Time and Materials Pricing [LO4]

Ronnie's Repair Company provides repair services for small engines and uses time and materi- als pricing. The company has budgeted the following costs for next year:

Text Box: Mechanics' wages and benefits . . . . . . . . . . . . . . . . . . . . . . . . . $900,000 Other repair costs, except for parts-related costs . . . . . . . $450,000 Costs of ordering, handling, 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.

Required:

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 a mount that would be billed for the job.

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