Question

L & B Appliance provides repair services for all makes and models of home appliances. L & B Appliance charges customers for labor on each job at a rate of $89 per hour. The labor rate is high enough to cover actual technician wages of $27 per hour, to cover shop overhead (allocated at a cost of $21 per hour), and to provide a profit. The company charges the customer "at cost" for parts and materials. A recent customer job consisted of $37 in parts and materials and 9 hours of technician time. 1. What was L & B Appliance's cost for this job? Include shop overhead in the cost calculation. 2. How much was charged to the customer for this repair job? 1. What was L&B Appliance's cost for this job? Include shop overhead in the cost calculation. Shop overhead Total job cost

Answer 1

Part 1: Computation of Total Job Cost: Particulars Amount S37 S243 S189 S469 Direct Materials BDirect Labor 9hrs*S27per hour C Shop Overhead 9hrs S21per hour DTotal Job Costatb+c So L&B Appliance's cost for this Job S469 Part 2: Computation of amount charged to customer for this repair Job: Particulars Amount S37 S801 S838 A Direct Materials BLabor charged 9hrs S89per hour Amount charged to customer- atb Amount charged to customer for this repair Job S838