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.