Cost-plus, time and materials, ethics. C & S Mechanical sells and services plumbing, heating, and air-conditioning systems. C & S's cost accounting system tracks two cost categories: direct labor and...

If Anderson’s objective is to maximize profits, which option would he recommend to Lee? What would be the ethical course of action?

Extracted text: Cost-plus, time and materials, ethics. C & S Mechanical sells and services plumbing, heating, and air-conditioning systems. C & S's cost accounting system tracks two cost categories: direct labor and direct materials. C & S uses a time-and-materials pricing system, with direct labor marked up 90% and direct materials marked up 40% to recover indirect costs of support staff, support materials, and shared equip- ment and tools and to earn a profit. During a hot summer day, the central air-conditioning in Brooke Lee's home stops working. C & S technician John Anderson arrives at Lee's home and inspects the air conditioner. He considers two options: replace the compressor or repair it. The cost information available to Anderson follows: Labor 5 hrs. 2 hrs. $30 per hr. Materials Repair option Replace option Labor rate $140 $240