Reference no: EM132766907

Question - Greg's Auto Repair uses time and material pricing. The following costs for repairs and parts have been budgeted for the coming year:

Repairs Parts

Mechanic's wages $200,000

Service Manager salary 50,000

Parts manger salary $36,000

Clerical assistant salary 18,000 15,000

Retirement Insurance 20% of salaries and wages 53,600 8,160

Supplies 1,200 540

Utilities 36,000 20,800

Property Taxes 8,400 1,900

Depreciation 76,800 37,600

Invoice cost of parts used 300,000

Total budged cost $444,000 $420,000

The company expects to bill customers for 16,000 hours of repair time. A profit of $7 per hour of repair time is considered to be feasible. A target profit of 15% of the invoice cost of parts in used.

Required -

a. Compute the billing rate for the mechanics in the repair service department and the material loading charge that would be used to bill jobs.

b. Calculate the cost of a job to repair a 2005 Honda Accord that will consume 4 hours of labour time and require $500 in parts and materials at cost.