Question

As you calculate the design cost for a site, you conclude it will be $50 per hour. However, your final estimate to the client will be for $55 per hour to include which cost (without including the cost as a line item)?

Answer 1

The extra $5 per hour in the design cost is to cover overhead costs or markup that isn't itemized on the bill. Analogy can be drawn from other simple linear equations for service charge calculations, where a set rate per hour is given alongside a one-time charge or profit margin.

Step-by-step explanation:

When calculating the design cost for a site at $50 per hour and deciding to charge the client $55 per hour, the additional $5 can be seen as covering either the overhead costs or a markup for profit that isn't itemized on the bill. To determine this final estimate, one could use a simple linear equation similar to the examples provided. For instance, following the same principle as in Example 12.3, if Aaron's Word Processing Service adds a fixed charge to the hourly rate, we can understand the final estimate of $55 per hour to include some type of fixed cost or markup as well.

In comparison, if workers receive a certain amount per hour and producing outputs has a fixed labor cost based on hours worked, the extra $5 in this case is an addition to the hourly wage to cover the extra expenses or for additional profit. So, if widget workers receive $10 per hour, their total cost for production would be the number of hours worked times $10, but the client might be billed at a higher rate to cover these added costs.