the true cost of a service technician - pei.org · base pay social security- emp. contribution...
Post on 06-Jun-2018
214 Views
Preview:
TRANSCRIPT
An Exercise
Direct Cost
Indirect Expenses
Productivity
Adjustments
This model will use service departments as the example.
Full-time employee
Worked the complete year
Work year based on 2080 hours (52 weeks x 40)
Base Pay
Social Security- Emp. Contribution
Contribution 6.2% or .062
Cap at $127,000.00 (2017)
Medicare-No Cap 1.45 % or .0145
Federal Unemployment
6% of 1st $7000.00, NTE $42.00
State Unemployment (Florida)
2.7% of 1st $7000.00
$216.00 Annual/2080 hours
Indiv. Cost/ hr Cumulative
$ 22.00 $ 22.00
1.36 23.36
0.32 23.68
0.02 23.70
0.10 23.80
Insurance (Married) Emp. Portion
Health $262.00 x 12 months/2080
Dental $ 48.00 x 12 months/2080
Life $ 0 x 12 months/2080
AD&D $ 0 x 12 months/2080
Optical $ 0 x 12 months/2080
Disability-Long term 0 x 12/2080
Workman’s Comp (Your state rate)
$ 1.79 per $100 Earnings
1.79% per $ 1.00 equal
Uniforms $216.00/2080
Indiv. Cost/hr Cumulative
$ 1.51 $ 25.32
$ 0.28 $ 25.60
$ 0 $ 25.60
$ 0 $ 25.60
$ 0 $ 25.60
$ 0 $ 25.60
$ 0.39 $ 25.99
$ 0.10 $ 26.09
Hand Tools per Tech Annually
$ 400.00/2080
Personal Use of Company Vehicle
Vehicle to and from work
12 miles each way, total 24 miles
0.50 per mile, $ 12.00/day
260 work days x 12 = $3120.00/yr
$ 3210/2080 hours
Profit Sharing/Pension (6%)
$ 22.00 x 6%
Indiv. Cost/hr Cumulative
$ 0.19 $ 26.29
$ 1.50 $ 27.79
$ 1.32 $ 29.11
Bonus, i.e. Christmas, Performance
$ 880.00/2080 (two weeks)
Absorption of OT(hrs paid not billed)
2 hrs/week, or 104 hrs/yr
Equals 156 hrs ST
Equals $ 11.00 extra cost/hr
Non billable = $1716.00/2080
Interest Free Loans 0/2080
Indiv. Cost/hr Cumulative
$ 0.42 $ 29.11
$ 0.83 $ 30.35
$ 0.00 $ 30.35
Vacation Pay
10 days= 80 hrs x 28.85/2080
($ 30.35 – 1.50 Truck use)
Holiday Pay/Personal/Sick Days
8 days= 64 hrs x 28.85/2080
($ 30.35 – 1.50 Truck use)
Total Direct Cost Before Productivity Adjustment
Indiv. Cost/hr Cumulative
$ 1.11 $ 31.46
$ 0.89 $ 32.35
_____________________________
$ 32.35
$ Amount % Accountability $Amt w/ Adjustment
Salaries 674,661.00 35 236,131.00
Payroll Tax 125,487.00 35 43,920.00
Depreciation 24,066.00 65 15,642.00
Maint & Repair 76,074.00 70 53,251.00
Rent 42,805.00 30 12,841.00
Vehicle Lease 0.00 0 0.00
General Ins. 91,085.00 70 63,759.00
Employee Ins. 0.00 0 0.00
Officer Life Ins. 10,380.00 35 3,633.00
Gas & Oil 129,476.00 75 97,107.00
Utilities 11,121.00 30 3,336.00
Office Sup. 28,508.00 35 9,997.00
$ Amount % Accountability $Amt w/ Adjustment
Telephone 56,859.00 75 42,644.00
Training/Cert 4,425.00 90 3,982.00
Acct/Legal 14,483.00 50 7,241.00
WH Exp 11,660.00 50 5,830.00
Emp. Travel 3,798.00 80 3,038.00
Licenses 3,869.00 50 1,935.00
Contributions 2,150.00 25 537.00
Adv & Promo 6,785.00 20 1,357.00
Dues/Subscript 1,590.00 20 318.00
Profit Sharing 29,264.00 35 10,242.00
(Other than Direct Labor)
$ Amount % Accountability $Amt w/ Adjustment
Total 1,348,546.00 -- 616,728.00
___________________________________________________________
Adjusted Indirect Expenses $ 616, 728.00
Total Indirect Expenses $ 1,348,546.00
Service Indirect Expenses : 46%
Actual Annual Hours Paid (Average) Payroll Records
Hours
Straight Time 1882
Overtime 342 OT = 513 ST 2395
Vacation 10 days = 80 2315
Holiday 6 days = 48 2267
Sick/Personal 2 days = 16 2251
Hours
Bill Out Adjustments
3 hours a week average
Call Backs
Warranty – Non Billable
Adjustments demanded by customer
Bad Debt – Service Related
Goodwill
3 hours/week x 52 = 156 2095
Hours
Non Productive Shop time, Educational,
and Safety classes
1 hour/day or 5 hours/week
Classroom
Cleaning Facility
Inventory Control
Coffee/BS Breaks
5 hr/week x 52 weeks = 260 hours 1835
Added Billing Hours
1 hour for every 8 hours billed
1835/8 = 229.38 2064.38
Total Productive Hours 2064.38
Productivity vs. Payroll 2064.38 / 2395
Productivity Efficiency 86%
RE: Productivity and Indirect Expense
Total Labor/Hr cost before productivity adjustment $ 32.35
Multiply by paid hours X 2395
Total Annual Direct Cost per Service Tech $ 77,480.84
BUT ONLY IF 2064.38 HOURS ARE PRODUCTIVE
Direct Cost per productive hour
$ 77,480.84/2064.38 = $ 37.53
Accountability of Indirect Overhead
Total Indirect Expenses $ 1,348,546.00
X % Related to Service Technician X 46%
Total Service Technician Indirect Overhead $ 616,727.65
Divided by total number of service techs / 16
Per Technician Indirect Overhead $ 38,545.48
Divided by the total number of productive hours / 2064.38
Cost per productive hour $ 18.67
True Cost Per Productive Hour Per Service Technician
A. Total Direct Cost Before Productivity Adjustment $ 32.35
B. Adjusted Direct Cost Per Productive Hour $ 37.53
C. Accountability of Indirect Overhead $ 18.67
True Cost (Equal B plus C) $ 56.20
Calculation Worksheet
1. Determine the hourly wage you will pay the employee. $ 22.00
2. Convert the hourly wage into an annual salary $ 45,760.00
3. Add benefits (FICA, Medicare, etc.) $ 12,480.00
4. Add vehicle cost if the employee will be driving a
company vehicle. $ 20,800.00
5. Determine the gross margin (GM) of the department
the employee will work in. 45%
6. Enter the data into the following formula:
Sales Required = Total (2,3,4)/ 1 minus the GM
Sales Required = $ 80,288/1-.45)
Sales Required = $ 80,288/.55 = $ 145,978.00/YR
Copyright 2013 HVACR Business Magazine Materials by Ruth King
top related