📝 Learning Competencies: Explain the meaning of repair service cost in electrical services.
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🎯Objectives
At the end of the lesson, you should able to:
Define Service Cost and its examples.
Apply proper costing procedures during simulated electrical repair activities.
Appreciate the importance of ethical practices in electrical service pricing.
✏️ PRE-TEST
Instructions: Read each question carefully and select the one best answer for all 5 multiple-choice questions in the Google Form before submitting.
📑 Lesson 7: Service Cost
Service Cost
Service Cost
Service costing involves identifying all expenses for creating, maintaining, and delivering a service.
Examples of these cost components include equipment, employee wages, consultancy fees, software, licensing fees, and charges for data center usage.
Examples of Service Cost
1. Replacement Material Costing
1. Replacement Material Costing
This term pertains to the expense of substituting an asset or component at its present market worth. It involves the cost of exchanging an existing item with another one possessing similar attributes. This includes calculating the costs of acquiring new materials to replace those depleted, damaged, or otherwise rendered unusable.
2. Man Power Labor Costing
2. Man Power Labor Costing
The process of calculating the labor cost for a product or service.
Types of Man Power Labor Costing
Types of Man Power Labor Costing
a. Direct Labor Cost
a. Direct Labor Cost
Costs derived directly from employees involved in the production.
Expenses related to regular working hours and overtime.
Example.
Salary of a welder working on a construction site
Susan is an assembly line factory worker. She cuts metal sheets and then attaches them to something. This item eventually becomes a finished product. Susan, therefore, forms part of the company’s direct labor (Nordqvist, 2018).
b. Indirect Labor Cost
b. Indirect Labor Cost
Cost of labor that is not directly related to the production of goods and the performance
of services.
Example
Tom and Susan work in the same company. Tom is a janitor. He cleans the assembly
area where Susan works. He spends most of his day with a bucket and a mop. Tom’s
Cleaning does not make finished products. We cannot trace his work back to any goods
that the company produces (Nordqvist, 2018).
c. Fixed Labor Cost
c. Fixed Labor Cost
Costs that are not expected to change over time.
d. Variable Labor Cost
Costs increase and decrease with production, such as hourly employees.
Example:
Contractors are tasked with addressing issues such as equipment failures and urgent repairs essential for business operations, which occur unpredictably and require case-specific attention.
Another instance involves individuals employed hourly, particularly during peak seasons like Christmas, when companies recruit temporary workers to meet heightened demand.
Philippine Construction (Arawan and Pakyawan)
Arawan
Arawan
Compensating workers daily or weekly by the agreed hourly labor price.
Pakyawan
Pakyawan
An arrangement between the homeowner or service seeker and the worker undertaking the project, establishing a set labor price for the service, regardless of material costs and additional expenses fluctuations.
📽️ Watch the video to learn more about the difference between Arawan and Pakyawan.
📝 LET'S DO THIS!
Understanding Service Costing: Replacement Material and Manpower Labor
Instruction: Click the button below to proceed with the activity.
✏️ POST TEST
Instructions: Read each question carefully and select the one best answer for all 5 multiple-choice questions in the Google Form before submitting.
✏️ WHAT I HAVE LEARNED?
Instruction: On a separate sheet of paper, answer the following questions. Your answers will be evaluated using the scoring rubrics.
Why is it important for electricians to practice honesty and fairness when pricing electrical services?
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