in our files; you'll see this column title above 15.31 in the last column of the chart. I trust I've made it a little easier for you to read the SDEAR chart. Let's take a closer look at the numbers in the SDEAR chart. As I mentioned, the LOWEST line item numbers represent the
lowest efficiency ratio percent we've seen. TOTAL DEPARTMENT EMPLOYEES was 5 technicians, full time and part time. TOTAL PAYROLL HOURS purchased from these technicians
was 7,176. No allowance for TECH HOURS COMPANY was made.
This allowance was for the hours spent working on company- owned equipment such as assembling the equipment for the sales department.
TECH HOURS AVAILABLE for billing to the customer was
7,176. ACTUAL HOURS BILLED was 1,099. HOURLY LABOR RATE was $50.00. (Please note that this hourly labor rate is several years old.) LABOR INCOME DOLLARS. Math: Multiply 1,099 hours
by $50.00 per hour = $54,950. NON-REVENUE HOURS was 6,077. Math: Subtract 1,099
hours billed from 7,176 payroll hours = 6,077. EFFECIENCY RATIO PERCENT was 15.31. Math: Enter
More than three decades ago, one of my mentors made the following statement: "Jim, the only way you keep score in business is to count the money."
hours billed (1,099) and divide by payroll hours (7,176), and the efficiency ratio for the department was 15.31 percent. A ratio of 15.31 percent means, of the 8 hours the company
purchased, the technicians were billing 1.22 hours, or 1 hour and 13 minutes. Math: Multiply 8 hours by .1531, the answer was approximately 1.22 hours. To determine .22 of an hour, enter 60 minutes and multiply by .22. The answer was approximately 13 minutes. Technicians were billing 1 hour and 13 minutes for every 8 hours on the clock. Poor performance can be a reflection of a technician's poor attitude toward the job or a lack of experience. In this case, poor performance was due to the lack of leadership. If the department was performing poorly, the responsibility belonged to the owner. Remember, the owner believed the service department was necessary, but it was not earning a profit. So, this service
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