Question

Pleaseee i need helppp

DISCUSSION BOARD going to use for help mdc 2071 11-14

Labor costs of an auto repair mechanic are seldom based on actual hours worked. Instead, this labor cost is based on an industry average of time estimated to complete a repair job. This means a customer can pay, for example, $120 for two hours of work on a car when the actual time worked was only one hour. Many experienced mechanics can complete repair jobs faster than the industry average. Assume that you are asked to complete such a survey for a repair center. The survey calls for objective input, and many questions require detailed cost data and analysis. The mechanics and owners know you have the survey and encourage you to complete it in a way that increases the average billable hours for repair work.

Required

1. Write a one-page memorandum to the mechanics and owners that describes the direct labor analysis you will undertake in completing this survey.

Answer 1

Given Data:

Given that labor costs of an auto repair mechanic are seldom based on actual hours worked.

This means a customer can pay for example $120 for two hours of work on a car when the actual time worked was only hour.

The memorandum for describing the direct labor analysis is as under.

To  

The Members and employees

Subject: Describing the direct labor analysis

Respected Members

The labor cost paid by the company is based on the average time estimated by the company which is 2 hours.

Whereas the actual time taken for repair an auto a 1 hours and even faster than that.

The company bills the customer for 2 hours whereas the actual times taken by the labour are much less than that which increases the cost to the customers.

Therefore the company should pay the worker for the actual hours taken for repair and also will the customer on the basis of the actual hours taken.

By billing the customers at the actual hours basis the company will also reduce the cost of the company and the customer satisfaction will also be increased.

Actually there are three methods to estimate cost based on previous data . Scatter diagram,high low method and least square regression method.

Of the three methods least square method yeilds the most precise estimated of cost behaviour .It is a statistical and spread sheet method with the help of connecting data points it estimates precisely.