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As a service to its customers, Current Designs repairs damaged kayaks. This is especially valuable to customers that have made a significant investment in the composite kayaks. To price the repair jobs, Current Designs uses time-and-material pricing with a desired profit margin of $34 per labor hour and a 50% materials loading charge.
Following is the budgeted cost data for Current Designs:
Repair technician wages $46,400
Fringe benefits $14,500
Overhead $14,500
Current Designs has allocated 2,900 hours of repair time for the upcoming year. The customer has agreed to transport the kayak to the Winona production facility for the repairs.
Problem 1: Determine the price that Current Designs would charge to complete the repairs for the customer.
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