00:01
So the georgia terms a labor contractor supplies contract labor to union construction companies, and he has budgeted to supply 84 ,000 hours of contract labor, and its variable costs are $13 per hour, and the fixed cost is $16 ,000.
00:40
Now the general manager has proposed a cost plus approach for pricing label at full cost plus 20%.
00:54
Now the first question, calculate the price per hour that the judge attempts to charge based on mason's proposal.
01:14
So the price per hour will be first writing the budgeted contract labor hours.
01:26
Which is $4 ,000 from the question from the table and then the variable cost and this is going to be $13 per hour multiplied by $4 ,000 and this is $10 ,000 and this is $1 ,092 ,000 and this is $1 ,092 ,000.
02:03
Now we have the fixed costs and it's given that the fixed cost is $168 ,000.
02:09
And then we have the total cost which is a fixed plus variable cost so that will be 1 million 260 ,000 right then we have the 20 % mark up of total cost which is 20 % of 1 million to 60 ,000 and this is 252 ,000 now we have the labor costs, which is $1 ,512 ,000.
03:11
And then the price per hour, which is what we're looking for, would be the labor cost divided by $4 ,000.
03:30
So when you divide this, you're going to get $18.
03:35
So therefore, price per hour is equal to $18.
03:48
Now the next question, the marketing manager supplies the following information on demand levels at different prices, and georgia times can meet any of these demand levels, and the fixed costs will not change for the demand levels.
04:04
And on the basis of additional information calculates the price per hour that georgia terms should charge to maximize operating income.
04:12
So we want to know the price per hour that the company should charge to maximize operating income.
04:19
Now, we're going to calculate the operating income and various demand hours.
04:45
So we have the budgeted contract labor hours and the value for one, we have five options, right? so the value for one option is $124 ,000.
05:14
Then we have 104 ,000...