PA 4-1 It takes a lawyer ... It takes a lawyer 117 minutes to serve one customer. Demand is 3 customers per 10 hour day. The lawyer has a wage rate of $225 per hour from a law firm. What is the cost of direct labor for the lawyer expressed in $ per customer

By demand Rate, cost per customer = $750/Customer

By the Lawyers actual Customers rate of efficiency = $450/Customer

Explanation:

Time it takes to serve 1 Customer = 117 minutes

Demand is 3 Customers Per 10 Hr day

Wage rate for Lawyer is $225/Hour

In a 10hr day Lawyer Wage is $225 x 10hrs = $2,250

Thus, based on Demand the Direct labour cost Per Client = $2,250/3 = $750/Customer

Based on the average time it takes the Lawyer to attend to a client of 117 minutes Per Client however, the Lawyer have met 5 Clients daily

The Direct Labour cost by this expression would be $2,250/5 = $450/Customer

The cost of direct labor for the lawyer based on demand rate = $750 per customer

Cost of direct labour for the lawyer based on supply rate = $450 per customer

Explanation:

Cost of direct labour is normally calculated from the demand rate.

In a 10 hour work period, the lawyer has 3 customers.

In a 10 hour work period, the lawyer is paid $225 * 10 = $2250

Wage rate per customer = ($2250/3) = $750 per customer

Based on supply rate (Rate at which the lawyer answers the customers)

Lawyer spends 117 minutes per customer. That is, (117/60) = 1.95 hours per customer.

Meaning, in a 10 hour work period, the lawyer has (10/1.95) = 5.13 ≈ 5 customers per 10 hour work day.

Direct labour rate based on the supply rate = $2250/5 = $450 per customer.