It takes a lawyer 120 minutes to serve one customer. Demand is 2 customers per 10-hour day. The lawyer has a wage rate of $150 per hour. a. What is the cost of direct labor for the lawyer expressed in $ per customer?

$750 per customer

Explanation:

Given that,

Time taken to serve 1 customer = 120 minutes

Demand = 2 customers per day

Wage rate = $150 per hour

Total available hours per 10-hour day:

= 10 × 60 minutes

= 600 minutes

Time taken for serving three customers:

= 120 minutes × 2

= 240 minutes or 4 hours

Labor cost of lawyer for servicing hours:

= Wage rate × Time taken for serving three customers

= $150 per hour × 4 hours

= $600

Direct labor cost of lawyer for 10-hours (2 customers):

= Wage rate × 10 hours

= $150 per hour × 10 hours

= $1,500

There is a 6 hours difference between the available hours and service hours. Since, the lawyer is attending 2 customers in an 10 hours day, the aforesaid 6 hours cost should be equally loaded on the 2 customers and then one customer = 6/2 = 3 hours

Direct labor cost for one customer:

= Direct labor cost of lawyer for 10-hours (2 customers) ÷ No. of customers

= $1,500 ÷ 2

= $750 per customer