Yelk Garage uses time and materials pricing. It is setting prices for next year using the following information: What should Yelk set as the direct labor rate per hour?
A) $70 per hour.
B) $50 per hour.
C) $64 per hour.
D) $100 per hour.
E) $84 per hour.

Question

Yelk Garage uses time and materials pricing. It is setting prices for next year using the following information:  What should Yelk set as the direct labor rate per hour?
A) $70 per hour. 
B) $50 per hour. 
C) $64 per hour. 
D) $100 per hour. 
E) $84 per hour.

Quizplus · Accepted Answer

Rate per hour = Labor rate per hour + Overhead per hour + Profit margin per hour
$50 + $20 + $14 = $84
Overhead per hour ($67,000 / 3,350) = $20
Profit margin ($50 + $20) × 20% = $14

Yelk Garage Uses Time and Materials Pricing