Yelk Garage Uses Time and Materials Pricing What Should Yelk Set as the Direct Labor Rate Per

question 61

Multiple Choice

Yelk Garage uses time and materials pricing.It is setting prices for next year using the following information: $$\begin{array}{l}\begin{array} { l l r } \text {Labor rate, including fringe benefits}&\$ 50 \text { per hour } \\\text {Annual labor hours}&3,350 \text { hours } \\\text {Annual materials purchases}&\$ 825,000 \\\text {Materials purchasing, handling, and storage}&\$ 46,000 \\\text {Overhead for depreciation, taxes, insurance, etc.}&\$ 67,000 \\\text {Target profit margin for both labor and materials}&20 \%\end{array}\end{array}$$ What should Yelk set as the direct labor rate per hour?

• A)$70 per hour.
• B)$50 per hour.
• C)$64 per hour.
• D)$100 per hour.
• E)$84 per hour.

---

Definitions:

Monthly Payments

Regular payments made over a set period of time, such as those for loans or subscriptions, calculated on a monthly basis.

Loan

An amount of money lent that must be repaid along with interest.

Compounded Daily

Interest calculation method where the interest is calculated and added to the principal amount daily, leading to increased earnings or payments over time.

Daily Payments

Payments made on a daily basis, often used in the context of loans or labor wages.