CHAP 18 - Page 735 - Beyond the Numbers

Ethics Challenge BTN 18-1

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 and 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 that you have the survey and encourage you to complete it in a way that increases the average billable hours for repair work.

Required:

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