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PRODUCTIVE TIME CALCULATION

The estimate of productive hours used in calculating recharge rates is determined


by deducting vacation, holiday, and sick hours usage from available working hours.
Also deducted are non-productive hours used for items such as training, general
maintenance, clean-up, etc. The productive hours are those hours that are
expected to be rechargable. When determining productive time the following
method should be used:

Annual Salary
Projected Merit and/or Range*
Portion of FTE Devoted to Activity
Total Salary
Benefit %
Benefit Amount

24.96%
8,486

Total Salary and Benefits

42,486

Hours per year


less:
Vacation hours
Holiday hours
Sick Leave hours
Non-Productive hours
Portion of FTE Devoted to Activity
equals:
Chargable (Productive) hours
Total Salary and Benefits
divided by:
equals:

32,974
1,026
100%
34,000

Chargable Hours
Hourly Recharge Rate

2,080
-120
-96
-64
-100
100%
1,700
42,486
1,700
$24.99

The department needs to take into account differences in employee vacation


accruals and non-productive hours. Determination of sick-leave usage and nonproductive hours can be estimated using past experience of the department as a
guide.
A description of the activities included within non-productive hours must be
included within the rate proposal to support the productive time calculation.

Recharge Personnel Hourly Rate Calculations


Account Name
Account/Fund

Department to complete green shaded are


(copy columns as necessary for additional

Name

This calculation can


be used when a
group rate is
charged to users

Group Rate

Title
Annual Salary
Projected Merit and/or Range*
Portion of FTE Devoted to Activity
Total Salary

Benefit %
Benefit Amount

0Total Salary & Benefits

Total Salary and Benefits

2,080

2,080

2,080

2,080

0%
0

0%
0

0%
0

0
0

0
0

0
0

Hours per year


less:
Vacation hours
Holiday hours
Sick Leave hours
on-Productive hours
Portion of FTE Devoted to Activity
equals Chargable (Productive) Hours:
Total Salary and Benefits
divided by Chargable Hours:

0% Chargable Hours
0
0
0
0

0
0

equals Hourly Recharge Rate:


(formulas are embedded in form)
* Effective date of projected merit and/or range

Hourly Group
Recharge Rate

SAMPLE RATE CALCULATION


ACTIVITY WHOSE SERVICES ARE MAINLY LABOR
For an activity, such as a machine shop, whose recharge rates are composed of
charges for labor and materials, the rate is normally an hourly rate and can be
calculated as follows:

Projected Operating Costs


Sub 1 Salaries
Sub 2 General Assistance
Sub 6 Employee Benefits
Subtotal Labor Costs
Sub 3 Supplies & Expenses
Sub 5 Equipment Depreciation
Sub 7 Other (Describe)
Total Operating Expense

100,000
50,000
30,660
180,660
10,000
9,340
200,000

Adjustment for Prior Years' Operations


Deduct Surplus or Add Deficit
0
Adjusted Total
200,000
Estimate Productive Hours
Hourly Rate

1,700 (from Productive Time calculation)


$

117.65

Notes:
This is a summary schedule and the preparer needs to provide information on
1) individual calculations associated with each cost component (I.e., salaries,
supplies, etc.).
Benefit percentages can be based on "Employee Benefit Data" provided in
2) attachment to Income and Recharge Guidelines or actual amounts from
department's payroll distribution reports.

SAMPLE RATE CALCULATION


MARK-UP ON STOCK ITEMS
Rates for activities such as storerooms, which provide stock items to users, should
be based on the cost of the merchandise plus a mark-up to cover the salaries and
other operating expenses of the function. For a storehouse operation there may be a
single mark-up rate applicable to all stocked items, or multiple rates based on
categories of merchandise. The mark-up percentages may be calculated as follows:

Projected Operating Costs


Sub 1 Salaries
Sub 2 General Assistance
Sub 6 Employee Benefits
Subtotal Labor Costs
Sub 3 Supplies & Expenses
Sub 5 Equipment Depreciation
Sub 7 Other (Describe)
Total Operating Expense

100,000
50,000
30,660
180,660
10,000
9,340
200,000

Adjustment for Prior Years' Operations


Deduct Surplus or Add Deficit
Adjusted Total

0
200,000

Projected Cost of Material to be Resol

1,500,000

Calculation of Mark-Up Rate:


Total Expenses
Cost of Materials

Equals

Percentage
Mark-Up on Cost

200,000
1,500,000

Equals

13.33%

SAMPLE RATE CALCULATION


ACTIVITY THAT PRODUCES GOODS OR TESTING SERVICES
Many recharge activities provide a range of services that require many different
rates. These areas must develop a list or catalog of rates. Rates for individual
items are determined by calculating labor and other costs for each item. The first
step is to calculate an hourly labor rate which will recover general operating
expenses. If needed, the hourly rate can be reduced to a per-minute rate.

Projected Operating Costs


Sub 1 Salaries
Sub 2 General Assistance
Sub 6 Employee Benefits
Subtotal Labor Costs
Sub 3 Supplies & Expenses
Sub 5 Equipment Depreciation
Sub 7 Other (Describe)
Total Operating Expense

100,000
50,000
30,660
180,660
10,000
9,340
200,000

Adjustment for Prior Years' Operations


Deduct Surplus or Add Deficit
0
Adjusted Total
200,000
Estimate Productive Hours

1,700 (from Productive Time calculation)

Hourly Labor Rate

117.65

Per Minute Labor Rate

1.96

(hourly rate divided by 60)

Notes:
Included in the hourly labor rate are some "general" support expenses that
1) support the employee and are not part of any materials to be charged
separately.

INDIVIDUAL RATE CALCULATION


Service Description

COLOR PRINT
Detail
Unit Cost

COLOR SLIDE
Detail
Unit Cost

Annual Item Production

100,000

100,000

2.00
1.96

1.00
1.96

Labor per Item in Minutes


Labor Cost per Minute
Labor Cost per Item
Material Cost per Item
Paper
Solution
Subtotal Materials
Special Equipment Maintenance
Special Equipment Depreciation
Subtotal

3.92

1.96

4,000.00
2,000.00
6,000.00

0.04
0.02
0.06

10,000.00
5,000.00
15,000.00

0.10
0.05
0.15

30,000.00
10,000.00
40,000.00

0.30
0.10
0.40

35,000.00
15,000.00
50,000.00

0.35
0.15
0.50

Per Item Rate

$4.38

$2.61

REVENUE & EXPENSES SUMMARY


Revenues: (List all services provided)
Color Print
Color Slides
Total Revenues

Volume
100,000
100,000

Rate
$4.38
$2.61

Total
438,000
261,000
699,000

Expenses: (Summarizes general operating & item specific costs)


Salaries
General Assistance
Employee Benefits
Supplies
General Equipment Depreciation
Special Equipment Depreciation
Equipment Maintenance
Materials
Total Expenses

100,000
50,000
30,660
10,000
9,340
25,000
65,000
21,000
311,000

Net Profit:

388,000

(Total Revenues - Total Expenses)

SAMPLE RATE CALCULATION


EQUIPMENT RENTAL OR USE
An activity which offers equipment or instruments for rental or use can develop a
rate for an individual item, such as a microscope. Rates for classes or groupings
of like items, such as computers, overhead projectors, or camcorders are also
possible. The following is an example of this type of rate calculation:
STEP 1 - Estimate Annual Usage of Each Item
# Item
10 Tape Recorders
20 Camcorders
Total Usage in Days

Usage (Days) Total Usage (Days)


200
2,000
150
3,000
5,000

STEP 2 - Calculate Per-Day General Operating Expenses


Projected Operating Expenses
Sub 1 Salaries
Sub 2 General Assistance
Sub 6 Employee Benefits
Subtotal Labor Costs
Sub 3 Supplies & Expenses
Sub 5 Equipment Depreciation
Sub 7 Other
Total Operating Expense
Adjustment for Prior Year's Operations
Deduct Surplus or Add Deficit
Adjusted Total

25,000
5,000
30,000
3,000
2,000
35,000

35,000

Estimated Usage in Days

5,000

Operating Expenses Per Day

$7.00

EQUIPMENT RENTAL RATES


Service Description

TAPE RECORDERS
Detail
Unit Cost

Annual Usage in Days

2,000

Operating Expenses per Day


Special Equipment Maintenance
Special Equipment Depreciation
Subtotal

CAMCORDERS
Detail
Unit Cost
3,000

7.00
1,000.00
3,000.00
4,000.00

Per Item Rate

0.50
1.50
2.00

7.00
1,000.00
2,000.00
3,000.00

$9.00

0.33
0.67
1.00
$8.00

REVENUE & EXPENSES SUMMARY


Revenues: (List all services provided)
Tape Recorders
Camcorders
Total Revenues

Volume
2,000
3,000

Rate
$9.00
$8.00

Expenses: (Summarizes general operating & item specific costs)


Salaries
Employee Benefits
Supplies
General Equipment Depreciation
Special Equipment Depreciation
Equipment Maintenance
Total Expenses
Net Profit:

(Total Revenues - Total Expenses)

Total
18,000
24,000
42,000

25,000
5,000
3,000
2,000
5,000
2,000
42,000
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