7. Zap Electrical Company provides electrical repair services and uses time and

Question

7. Zap Electrical Company provides electrical repair services and uses time and material pricing. The company has budgeted the following costs for the year Electricians' wages and fringe benefits Other repair costs (Van, supplies, uniforms etc.) Cost of ordering, handling and storing parts S 300,000 150,000 15 % of invoiced cost The company expects to log 15,000 billable hours for repair services for the year. The company wants to make a profit of$10 per hour for electricians' time. The competitive markup on supplies is 20% over invoiced cost. Compute the time rate and material loading charge that would be used to bill jobs. One electrician just completed a job that required 4 hours of labor and S 100 in parts (invoice cost). Compute the amount that would be billed for the job.

Explanation / Answer

Wage cost per hour= 300000/15000= 20

add: mark up per hour= 10

Time rate per hour to bill = 20+10= 30

Loading charge on material= Handling charge+ mark up= 15%+20%= 35% of invoice cost

Bill for the Job:

Material 100 mark up 35 [100*35%] Labor 120 [4*30] Total 255

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