AIP 3.7 Costs of Providing a Service LO 3, 8 In Britain, the Municipality of Progress is considering a reimbursement fee to recover costs of its Fire Authority in cases where the local court finds the parties responsible for the fire guilty of gross negligence. If the program is successful, the municipality may extend the program to all emergency services and be able to reduce the local council tax levy. Progress currently uses labor hours to trace costs to different services. The cost per labor hour is determined as follows: Annual salaries and benefits (12,480 hours) 225,000 Education and training 50,000 Property and liability insurance 40,000 Depreciation of building and equipment 65,000 Operating supplies 25,000 Utilities 20,000 Total annual costs 425,000 Cost per labor hour = 425,000/12,480 = 34.05/labor hour The Fire Authority currently performs many services, including: (1) firefighting, (2) medical assistance, (3) hazardous waste removal, (4) rescuing pets, (5) search and rescue, (6) community service at local schools and the senior citizen center, (7) training, and (8) maintenance of equipment. The latter three activities account for over 80 percent of the annual labor hours. Is the fee of 34.05/labor hour an accurate measure of the cost of fighting fires due to gross negligence