Question

CD8 Creative Designs

As a service to its customers, Creative Designs repairs damaged kayaks. This is especially valuable to customers that have made a significant investment in the composite kayaks. To price the repair jobs, Creative Designs uses time-and-material pricing with a desired profit margin of $20 per labor hour and a 50% materials loading charge.

Recently, Bill Johnson, Vice President of Sales and Marketing, received a phone call from a dealer in Brainerd, Minnesota. The dealer has a customer who recently damaged his composite kayak and would like an estimate of the cost to repair it. After the dealer emailed pictures of the damage, Bill reviewed the pictures with the repair technician and determined that the total materials charges for the repair would be $100. Bill estimates that the job will take 3 labor hours to complete. Following is the budgeted cost data for Creative Designs:

Repair technician wages			$30,000
Fringe benefits			$10,000
Overhead			$10,000

Creative Designs has allocated 2,000 hours of repair time for the upcoming year. The customer has agreed to transport the kayak to the Winona production facility for the repairs.

Instructions

Determine the price that Creative Designs would charge to complete the repairs for the customer.

		Total Cost	Total Hours	Per Hour Charge
Repair technician's wages		X	X	X
Fringe benefits		X	X	X
Overhead		X	X	X
		X	X	X
Profit margin				X
Rate changed per labor hour				X
Job: Composite kayak repair
Labor charges			X
Material Charges
Cost of parts and materials		X
Materials loading charge		X	X
Total price of labor and material			X

Boxes with an "X" require an answer.

Answer 1