The cost of repair time would be estimated for both the scenario. However, the first scenario demands to estimate the repair time for the Holden Vehicle which has a model no. VX Commodore and the manufacturing date is 2002 and installed engine is V6 3.8L petrol. In this vehicle, the customer wants to modify front and rear bike with slotted and drilled rotors. They also want to change the brake pads to heavy duty due to customer has to travel distance every day while scenario 2 demand for the repairs of Honda vehicle with model CRV and it is purchased in year MY2015 series II and having an engine with 2.0 I-VTEC (Carroll et al., 2016). In this, customer also wants to change the headlight of the vehicle to HID due to the visibility with normal halogen bulb is not enough to see.
In concern to both the scenario, there is need to follow the steps for estimating the cost of repair time.
Step 1: Identify how labour cost as per the hourly basis:
The first and foremost, there is need to determine the time to figure out the labour cost of the repairs. The management of both Holden and Honda needs to investigate the area for determining how many brake pads for bike is required and for Honda, what type of headlight is required to install so that visibility would be cleared.
In regards to this, the management of both the companies requires to estimating the labour work or actions on the hourly basis and what maximum dollar amount an auto body shop can charge is. The auto shop charges the amount as per the stock requirements. Like in case1, there is need for the brake pads so the autos shop charge accordingly. In a similar manner, the shopkeeper charge for the headlight (Abbasianjahromi et al., 2013). On the basis of study, it is summarised that there is highly requirement of the estimation of labour cost for finding actual value of cost of repair time.
Step 2: identify how long the repair will take:
Secondly, the management would work together to determine in regards to how long a repair should take. It means that every quarter include how much action of work.
Such practice not only helps in relation to define the exact amount of time a repair should take and it also helps the insurance company to identify exact amount of time that require for rental car. Thus, through this manner, both the vehicle company would estimate cost of repair time.
The subcontractor plays an integral role in the auto vehicle sector. Basically, the subcontractor is the one which hires by another contractor to help them complete their contracted work. It performs several duties and responsibility and this create the necessity for the scenario to work done by the sub-contractor. Here are the works done by the side of subcontractor.
In this case, the subcontractor performs several works such as make an availability of stock for the contractor so that employees could perform their respective task. Likewise, the contractor would help the Holden Company in regards to buy the brake pads which is best fitted for long distance travelling. The subcontractor proves to be useful in this case as it provide the right material to the company through contacting right supplier. This can contribute towards the addition of quality into the product. The subcontractor also assist in performing the activities as per the given company norms and legislation. For instance, the subcontractor of Holden would help the company in regards to contact the right supplier so that company can modify the rear brake with slotted and drilled rotors (Cheng et al., 2011). This change helps the customer to cover the longer distances. Thus, sub-contractor assists in such manner towards the fulfilment of task.
Calculation for the work required to be done by subcontractor:-
|Resources required||Estimated cost|
|Labour cost||$ 20000|
|Rear brakes||$ 130- $900|
|Staff & administration expenses||$ 15000|
|Warehouse maintenances cost||$ 25000|
In context to Honda, the subcontractor would perform the task related to make availability of right product as the Honda vehicle model CRV demands for the repairmen in the area of headlight as people are facing problem with the visibility of such halogen bulb. In that case, the subcontractor proves to be useful for making availability of headlights so that improvements can be bringing in the Honda new models (Vandamme et al., 2013). Other than that, Subcontractor is also held responsible for supplying the necessary equipments, Stock, material, labour and services etc. for this, they hire specialized subcontractor to perform either a portion or entire work. Basically, company use the subcontractor with the aim to protect themselves with the negative consequences.
Hence, these are the work that subcontractors would perform in different scenarios.
Calculation for the work required to be done by subcontractor:
|Resources required||Estimated cost|
|Labour cost||$ 5000|
|Staff & administration expenses||$ 10000|
|Warehouse maintenances cost||$ 20000|
There are various types of model that would help in analyses the cost of vehicle components of different scenario.
For the scenario of Holden, the component cost analysis can be done through the account analysis method. As per this method, this approach determines the cost in each account such as fixed and variable. The totalling of all cost is considered as a total fixed cost. For the identification of variable cost, all cost divided by the measure of activity (units produced). This way the cost of rear brake component can be identified under the scenario 1.
Here is the calculation of account analysis:-
|Units produced and sold ……|
Material used in production …….
Labour used in production …….
(Assembly and Supervision)
Production facility costs …….
(rent, insurance, utilities etc)
Total production cost …….
In concern to scenario 2, high-low method would use by the Honda for calculating the cost of components such as headlight. This method uses historical information from different reporting periods to measure the expenses. It means obtain monthly production cost information of last 12 months from the financial accounting function.
There are various steps that need to follow while applying this method. It includes the following:-
- Determine the high and low activity levels from the data set.
- Estimate the variable cost per unit (v) (Yang et al., 2014).
- Estimate the total fixed cost (f).
- State the outcomes in equation from such as Y= f+ v
These steps will help the Honda to calculate the expenses when change the headlight of the vehicle. This method is suited well in terms to calculate the cost of components in Vehicle.
This part documents all the costs that incur in the respective scenario and presents the different methods which use to estimate the cost of each component. At the same time, variation will be study in both scenario which arise due to different component and subcontracting costs.
Hondal model VX Commodore wants to bring modification through install front and rear brakes with slotted and drilled rotors and also want to change the brake pads so that traveller could cover long distances. In order to install such components, the cost will be calculated with the help of account analysis method. Likewise, it includes Units produced and sold, Material used in production, Labour used in production (Assembly and Supervision), Production facility costs (Rent, insurance, utilities etc) and Total Production Cost (Thomas and Jund, 2013). The subcontractor aim is to bring the accurate quality through contact right material for bringing the appropriate improvements into the vehicle.
Honda model CRV demands for the modification in the headlights of the vehicle to HID as normal halogen bulb visibility tend to be not enough. For calculation of components, the high-low method in which various step follows. The sub-contractor works is to supplying the right material and hire the specialised staff for bringing success to the project.
The variations exist due to both the cases demand different modification. The modification requires several resources, cost, human resources etc. These create the variation among the selection of cost method.
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