COMMERCE 2AB3 Lecture Notes - Lecture 10: Transfer Pricing, Profit Margin, Contribution Margin
1 Apr 2017
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Document Summary
Another variation on cost-plus pricing is time-and-material pricing: company sets two pricing rates. One for the labour used on a job and another for the materials. Labour rate includes direct labour time and other employee costs. Material charge is based on the cost of direct parts and materials used and a material loading charge for related overhead costs: widely used in service industries specially professional firms. Steps: (1) calculate the per-hour labour charge, (2) calculate the charge of obtaining and holding materials, (3) calculate the charges for a particular job. Expressed as a rate per hour of labour: includes. Direct labour cost of the employee including the hourly rate or salary and fringe benefits. An allowance for a desired profit or roi per hour of employee time. Labour rate for lake holiday for 2012 based on: 5,000 hours of repair time, desired profit margin of per hour.
