On-Time Computer Repairs provides computer repair services for the community. Laurie Estes's computer was not working, and she called On-Time for a home repair visit. The On Time technician arrived at 2:00 P.M. to begin work. By 4:00 P.M. the problem was diagnosed as a failed circuit board. Unfortunately, the technician did not have a new circuit board in the truck, since the technician's previous customer had the same problem, and a board was used on that visit. Replacement boards were available back at the On-Time shop. Therefore, the technician drove back to the shop to retrieve a replacement board. From 4:00 to 5:00 P.M., the On-Time technician drove the round trip to retrieve the replacement board from the shop.
At 5:00 P.M. the technician was back on the job at Laurie's home. The replacement procedure is somewhat complex, since a variety of tests must be performed once the board is installed. The job was completed at 6:00 P.M.
Laurie's repair bill showed the following:
Circuit board ... $ 80
Labor charges .. 190
Total ...... $270

Laurie was surprised at the size of the bill and asked for some greater detail supporting the calculations. On-Time responded with the following explanations.

Cost of materials:
Purchase price of circuit board ............ $ 60
Markup on purchase price to cover storage and handling . 20
Total materials charge .............. $ 80
The labor charge per hour is detailed as follows:
2:00–3:00 P.M. .... $40
3:00–4:00 P.M. .... 35
4:00–5:00 P.M. .... 45
5:00–6:00 P.M. .... 70
Total labor charge .. $190

Further explanations in the differences in the hourly rates are as follows:
First hour:
Base labor rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20
Fringe benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Overhead (other than storage and handling) . . . . . . . . . . . . . . . . . . . 8
Total base labor rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35
Additional charge for first hour of any job to cover the
cost of vehicle depreciation, fuel, and employee time in
transit. A 30-minute transit time is assumed . . . . . . . . . . . . . . . . . . 5
$40
Third hour:
Base labor rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35
The trip back to the shop includes vehicle depreciation
and fuel; therefore, a charge was added to the hourly rate
to cover these costs. The round trip took an hour. . . . . . . . . . . . . 10
$45
Fourth hour:
Base labor rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35
Overtime premium for time worked in excess of an eight hour
day (starting at 5:00 P.M.) is equal to the base rate. . . . . . . 35
$70

1. If you were in Laurie's position, how would you respond to the bill? Are there parts of the bill that appear incorrect to you? If so, what argument would you employ to convince On-Time that the bill is too high?
2. Use the headings below to construct a table. Fill in the table by first listing the costs identified in the activity in the left-hand column. For each cost, place a check mark in the appropriate column identifying the correct cost classification. Assume that each service call is a job.

Cost Direct Materials Direct Labor Overhead