Shale Remodeling uses time and materials pricing. It is setting prices for next year using the following information: What is the total price for a project requiring 160 direct labor hours and $150,000 of materials?
A) $184,000.
B) $210,000.
C) $256,000.
D) $225,000.
E) $253,500.

Question

Shale Remodeling uses time and materials pricing. It is setting prices for next year using the following information:  What is the total price for a project requiring 160 direct labor hours and $150,000 of materials?
A) $184,000. 
B) $210,000. 
C) $256,000. 
D) $225,000. 
E) $253,500.

Quizplus · Accepted Answer

Markup = Materials overhead % + Profit margin %: 20% + 25% = 45%
Materials purchasing, handling, and storage ($241,250 / $1,206,250) = 20%
Rate per hour = Labor rate per hour + Overhead per hour + Profit margin per hour
$75 + $105 + $45 = $225
Overhead per labor hour ($666,750 / 6,350) = $105
Profit margin ($75 + $105) × 25% = $45
Total price = Labor + Materials + Materials markup
($225 × 160) + $150,000 + ($150,000 × 45%) = $253,500

Shale Remodeling Uses Time and Materials Pricing