Temps can meet any of these demand levels. Fixed costs will remain unchanged for all the preceding demand levels. On the basis of this additional information, what price per hour should Temps charge? 3. Comment on your answers to Requirements 1 and 2. Why are they the same or not the same?
Temps can meet any of these demand levels. Fixed costs will remain unchanged for all the preceding demand levels. On the basis of this additional information, what price per hour should Temps charge? 3. Comment on your answers to Requirements 1 and 2. Why are they the same or not the same?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Problem 11 (Cost-Plus and Market-Based Pricing)
Temps, a large labor contractor, supplies contract labor to building
construction companies. For 20X1, Temps has budgeted to supply 80,000
hours of contract labor. Its variable cost is P120 per hour and its fixed costs
are P2,400,000. Roger Mason, the general manager, has proposed a cost-plus
approach for pricing labor at full cost plus 20%.
Required:
1. Calculate the price per hour that Temps should charge based on Mason's
proposal.
2. Sheila Ragos, the marketing manager, has supplied the following
information on demand levels at different prices:
Demand (Hours)
120,000
100,000
80,000
70,000
Price per Hour
P160
170
180
190
200
60,000
Temps can meet any of these demand levels. Fixed costs will remain
unchanged for all the preceding demand levels. On the basis of this
additional information, what price per hour should Temps charge?
3. Comment on your answers to Requirements 1 and 2. Why are they the
same or not the same?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F67d69b03-6cd8-4f18-9c41-f32a8fbe6d2d%2Fa10bd479-0aa7-4388-aec1-d59415efe365%2Fnakcw9j_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 11 (Cost-Plus and Market-Based Pricing)
Temps, a large labor contractor, supplies contract labor to building
construction companies. For 20X1, Temps has budgeted to supply 80,000
hours of contract labor. Its variable cost is P120 per hour and its fixed costs
are P2,400,000. Roger Mason, the general manager, has proposed a cost-plus
approach for pricing labor at full cost plus 20%.
Required:
1. Calculate the price per hour that Temps should charge based on Mason's
proposal.
2. Sheila Ragos, the marketing manager, has supplied the following
information on demand levels at different prices:
Demand (Hours)
120,000
100,000
80,000
70,000
Price per Hour
P160
170
180
190
200
60,000
Temps can meet any of these demand levels. Fixed costs will remain
unchanged for all the preceding demand levels. On the basis of this
additional information, what price per hour should Temps charge?
3. Comment on your answers to Requirements 1 and 2. Why are they the
same or not the same?
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
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 4 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education