Capstone Assignment 10 – Forecasting Notes

Case 19-7

Quad City Auto is open to do repair work Monday through Friday from 8am to 5pm. They are a four technician shop. They charge $80 per flat-rate hour for all services and repairs at their shop. The technicians are paid flat-rate at an average rate of $20 per flat-rate hour. Work at their shop is very steady. They are very happy that as a shop they produce 40 hours of labor sales every day. Along with selling the repair labor, they are able to generate parts sales of $1200/day ($960 cost). The shop purchases all of their parts from the parts wholesaler down the street and charges the customer 20 percent markup on the cost (1.25 x $960 = $1200)

A. Based on no other changes, what should they project will be their total monthly sales?

B. What effect will three sick days for Lucius and attending a two day seminar for Fred make to their total monthly sales?

Next month, February they will be open 20 workdays. All of their technicians are scheduled to work the entire month. Each tech works an 8 hour day.

Note:  Out of the 40 hours per day that the techs are available each tech produces 10 hours per day (4 techs x 10 hours per day)

Formula for Total Sales

(Available hours x Efficiency x Labor Rate) + Parts Sales for month =Total Sales for the month

First you have to find these

Available Hours Calculation

Hours per day x Days per month x Techs available = Available hours

Efficiency Calculation

Billable hours / Clock Hours x 100 = Tech Efficiency

Labor Rate

Customer Flat Rate Charge

Gross Profit Percent

Gross Profit / Sales

Case 19-8

Same as the last problem but find the following:

A. Based on the monthly sales projections that you reached, what will their monthly gross profit be?

B. What effect will three sick days for Lucius and attending a two-day seminar for Fred make to their total monthly gross profit?

C. What is the gross profit percent?