Question

Problems 1. Alima runs a specialty sewing shop in Abu Dhati and doss repairs and siteration on men's and women's clothing. For some reason, she uses ime and material priing techniques to determine prices to charge customers For May 2019, she estimates that wages will be 16,000 dirhams, other employment benets payments will be 4,000 dirhams and overhead will be 4,000 dirhams. She estimates that her employees will work 500 hours in May She applies a proft margin of 22 dirhams per labor hour to account for her own time and effort. She also applies a material loading fee or charge of 30% on all materials used. a. Determine the total labor cost per hour labor (excluding the profit margin) and her total hourly labor rate or cost (including the profit margin). (show work) 14 points) She now accepts a big job that will take 200 labor hours and use 12.000 dirhams cf materials. De termine the total bill showing labor charges, materials, and materials loading fees. (show work) [4 points]

Answer 1

a.

Wages(A) = 16,000 dirhams
Other employment benefit payments(B) = 4,000 dirhams

Total Labour Cost= (A+B) = 16,000 + 4,000 = 20,000 dirhams

Total labour hours for the month = 500 hours

Labour Cost per hour (excluding profit margin) = 20,000/500 = 40 dirhams per hour

Profit margin to account for owner's effort = 22 dirhams per labour hour

Labour cost per hour (including profit margin) = 40 + 22 = 62 dirhams per hour

b.

Total hours required for the big job = 200 hours

Materials cost = 12,000 dirhams

Total Bill is as follows

	Rate	Cost
Materials		12,000
Labor Charges	40	8,000
Material loading	30% of material	3600
Overhead	8	1,600
Total Cost		25,200
Profit Margin	22	4,400
Total		29,600