rate compared to the rate determined in (a). 3.25 A customer has requested a quo
ID: 1168248 • Letter: R
Question
rate compared to the rate determined in (a). 3.25 A customer has requested a quotation for a machining job consisting of 80 parts. The starting work part is a casting that will cost $17.00 per casting. The average production time of the job is 13.80 min on an automatic machine whose equipment cost rate is $66.00/hr. This rate does not include any overhead costs. Tooling cost is $0.35 per part. The factory over head rate is 128% and the corporate overhead rate is 230%. These rates are applied only to time and tooling costs, not starting material costs. The company uses a 15% markup on total cost for its price quotes. What is the quoted price for this job?Explanation / Answer
Casting cost = $17
Total Tooling cost = $0.35 x 80 = $28
Cost of equipment time = $66 x (13.80 / 60) = $15.18
Factory Overhead applied to Tooling & Equipment Timing @128% = $(17 + 15.18) x 2.128 = $68.48
Corporate Overhead applied to Tooling & Equipment Timing @230% = $(17 + 15.18) x 3.23 = $106.19
So:
Total Cost = Cost of (Casting + Tooling + Equipment Timing + Factory Overhead + Corporate Overhead)
= $(17 + 28 + 15.18 + 68.48 + 106.19) = $234.85
Add to it: Markup @15% = $234.85 x 0.15 = $35.23
So, Quote price = Total cost + markup = $(234.85 + 35.23) = $270.08
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