K & R Mechanical sells and services plumbing, heating, and air conditioning systems. K & R's cost accounting system tracks two cost categories: direct labor and direct materials. K & R uses a time-and-materials pricing system, with direct labor marked up 90% and direct materials marked up 50% to recover indirect costs of support staff, support materials, and shared equipment and tools and to earn a profit. Requirement 1. If Rolland presents Burke with the replace or repair options, what price would he quote for each? Complete the table below to determine the price Rolland would quote for each option. Repair option Replace option Labor Requirements Materials Total Price 1. If Rolland presents Burke with the replace or repair options, what price would he quote for each? 2. If the two options were equally effective for the 3 years that Burke intends to live in the home, which option would she choose? 3. If Rolland's objective is to maximize profits, which option would he recommend to Burke? What would be the ethical course of action? Data table During a hot summer day, the central air conditioning in Nancy Burke's home stops working. K & R technician Sam Rolland arrives at Burke's home and inspects the air conditioner. He considers two options: replace the compressor or repair it. The cost information available to Rolland follows: Labor Materials Repair option 7 hrs. $160 Replace option 2 hrs. $280 Labor rate $40 per hour - ☑ - ✗
K & R Mechanical sells and services plumbing, heating, and air conditioning systems. K & R's cost accounting system tracks two cost categories: direct labor and direct materials. K & R uses a time-and-materials pricing system, with direct labor marked up 90% and direct materials marked up 50% to recover indirect costs of support staff, support materials, and shared equipment and tools and to earn a profit. Requirement 1. If Rolland presents Burke with the replace or repair options, what price would he quote for each? Complete the table below to determine the price Rolland would quote for each option. Repair option Replace option Labor Requirements Materials Total Price 1. If Rolland presents Burke with the replace or repair options, what price would he quote for each? 2. If the two options were equally effective for the 3 years that Burke intends to live in the home, which option would she choose? 3. If Rolland's objective is to maximize profits, which option would he recommend to Burke? What would be the ethical course of action? Data table During a hot summer day, the central air conditioning in Nancy Burke's home stops working. K & R technician Sam Rolland arrives at Burke's home and inspects the air conditioner. He considers two options: replace the compressor or repair it. The cost information available to Rolland follows: Labor Materials Repair option 7 hrs. $160 Replace option 2 hrs. $280 Labor rate $40 per hour - ☑ - ✗
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
Please help answer requirement 1, requirement 2, and requirement 3. And complete the table below to determine the price Rolland would quote for each option using the data table.
Transcribed Image Text:K & R Mechanical sells and services plumbing, heating, and air conditioning systems. K & R's cost accounting system tracks two
cost categories: direct labor and direct materials. K & R uses a time-and-materials pricing system, with direct labor marked up
90% and direct materials marked up 50% to recover indirect costs of support staff, support materials, and shared equipment and
tools and to earn a profit.
Requirement 1. If Rolland presents Burke with the replace or repair options, what price would he quote for each?
Complete the table below to determine the price Rolland would quote for each option.
Repair option
Replace option
Labor
Requirements
Materials
Total Price
1. If Rolland presents Burke with the replace or repair options, what price would he
quote for each?
2. If the two options were equally effective for the 3 years that Burke intends to live in
the home, which option would she choose?
3. If Rolland's objective is to maximize profits, which option would he recommend to
Burke? What would be the ethical course of action?
Data table
During a hot summer day, the central air conditioning
in Nancy Burke's home stops working. K & R
technician Sam Rolland arrives at Burke's home and
inspects the air conditioner. He considers two options:
replace the compressor or repair it. The cost
information available to Rolland follows:
Labor
Materials
Repair option
7 hrs.
$160
Replace option
2 hrs.
$280
Labor rate
$40 per hour
-
☑
-
✗
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 1 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education