Shocker Electrical, which installs sophisticated electronic-control systems in new homes, prices jobs by using the time-and-materials method. The following data apply to a job for ABC Builders:Labor hours: 180Materials cost: $48,000The following predictions, based on 30,000 direct labor hours, pertain to the company's operations for the year:Annual overhead costs:? Material handling and storage$ 40,000 Other overhead costs360,000Annual cost of materials used500,000Labor rate per hour, including fringe benefits34Shocker Electrical adds a markup of $15 per hour on its time charges, but there is no profit markup on material costs.Required:Calculate the price for the ABC Builders' job.
What will be an ideal response?
Time charges: $34 + ($360,000 ÷ 30,000 hours) + $15 = $61 per hour
Material handling: $40,000 ÷ $500,000 = 8% of material cost
| Price quotation for ABC Builders: | ? |
| Labor: 180 hours × $61 | $ 10,980 |
| Material: $48,000 × 108% | 51,840 |
| Total | $62,820 |
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