What billing method involves accounting for actual costs of labor, materials, and equipment based on a predetermined price list?

The time and materials method is characterized by billing clients based on the actual costs incurred for labor, materials, and equipment. This approach allows for flexibility in pricing, as it reflects the true expenses involved in a project. The method requires detailed documentation of all materials used and the hours worked, ensuring transparency and accountability in billing. This makes it particularly effective in situations where project scopes are not fully defined from the outset, allowing for an accurate reflection of work performed.

In contrast to other methods, such as the standard pricing method, which relies on fixed pricing for services, or the cost-reimbursement method, which involves the client covering all direct costs plus a fee, the time and materials approach focuses on actual expenses as they occur. The direct billing method typically does not account for itemized costs in the way the time and materials method does; instead, it may involve set fees without detailing the components of those costs. Thus, the time and materials method provides a comprehensive way to align billing with real-time job costs, making it the correct choice in this context.