Question

hh electric reports the following information. direct labor rate $ 30 per dlh non-materials-related overhead $ 15 per dlh materials-related overhead 5% of direct materials cost target profit margin (on both conversion and direct materials) 20% a. compute the time charge per hour of direct labor. b. compute the materials markup percentage. c. what price should the company quote for a job requiring four direct labor hours and $580 in materials?

Answer 1

a. time charge per hour of direct labor: $54

b. materials markup: 25%

c. time and materials price: $941

Step-by-step explanation:

a.

Time charge per hour of direct labor

Direct labor rate per direct labor hour $ 30

Non-materials related overhead per direct labor hour 15

Total hourly conversion cost 45

Target profit ($45 × 20%) 9

Time charge per hour of direct labor $ 54

b.

Materials markup per dollar of direct materials cost

Materials-related overhead 5%

Target profit margin 20%

Materials markup 25%

c.

Time and Materials Price Quote

Direct labor ($54 × 4 hours) $ 216

Direct materials 580

Materials markup ($580 × 25%) 145

Time and materials price $ 941