Workshop Management, Costing, Estimating and Records
Domain focus
This domain tests job costing, estimating, labour rates, overhead recovery, inventory, and records. The aim is a price that recovers cost and profit while remaining defensible to the customer.
Core rules
- Job cost = direct labour + direct parts + consumables + allocated overhead.
- Labour rate should include technician wage, on-costs, productive-hour recovery, and workshop overhead.
- Markup is added to cost; margin is a percentage of selling price. They are not interchangeable.
- Job cards, parts requisitions, warranty claims, and vehicle histories are records that support costing and disputes.
- Inventory control balances holding cost against stock-out risk.
Worked example
A repair uses 4.5 labour hours at 3,500 per hour = 15,750, parts 28,000, and consumables 1,250. Direct cost = 45,000. Overhead is absorbed at 20% of labour = 3,150, so total cost = 48,150. If the workshop wants a 20% profit margin, selling price = 48,150 ÷ (1 − 0.20) = 60,187.50. A 20% markup would give only 57,780, so the margin method protects the target profit.
Traps
Confusing margin with markup, omitting consumables and sublet work, and charging overtime without recording it. An estimate is not a final invoice; additional work needs authorisation and a revised record.