Issue link: https://iconnect007.uberflip.com/i/1500520
72 SMT007 MAGAZINE I JUNE 2023 Sue suggested that they put all the data they were discussing in a spreadsheet. Matt then gave Patty, Sue, and Andy a tour of the facility and answered their many questions. "I pay the operators about $20 per hour and the engineers $40 per hour," he said. "I figure a 40% premium is fair. So, I plan to charge $28 per hour for the operators and $56 per hour for the engineers. Does that seem about right?" Sue and Andy stared in disbelief at Patty, who then suggested that the two join her in a small conference room to analyze the situation. As she closed the conference room door, Sue said, "Is Matt kidding? Can't he see right off the bat that he'll lose his shirt if he charges so little?" Andy shared the same sentiment, so Patty explained the situation. "Matt charges his PCB assembly custom- ers per board assembled using a formula the pre- vious owner used, so he is unfamiliar with cur- rent charges for this type of work. Let's help him by suggesting what he should charge, and back it up with analysis. But I want you two to take the lead on this." She then le the room to chat with Matt. Andy repeated what Matt had said about 20 operators and five engineers being paid $20 per hour and $40 per hour, respectively. Sue said, "I think it will make our calculations easier if we consider that he also has 20 oper- ators and five engineers doing SMT assembly. Overhead costs will be split between the two operations. He has one person in marketing, one in sales, and two people in procuring and purchasing of PWBs, components, etc." "He also has two managers—one for SMT and one for the new project—and an admin- istrative assistant. He also has an accountant," Andy said. "He told us that he personally wants to make $250,000 annually." Sue suggested that they put all the data they were discussing in a spreadsheet. Aer about 90 minutes of work, Sue and Andy were quite confident they had a reasonable estimate of how much it would cost Matt to keep his operators and engineers employed. Just then, Patty returned, and they reviewed the final numbers together. Patty thought their answers were spot on. "Okay, let's discuss your analysis with Matt." Andy suggested that Sue kick off the meet- ing because she had developed the spread- sheet." Once they convened in the confer- ence room, Sue said, "Matt, it is true that you pay your operators $20 per hour and pay your engineers $40 per hour. However, with all overhead costs, we estimate that the oper- ators actually cost about $44 per hour and the engi- neers $74 per hour. So, you need to charge at least this amount." Matt felt shaken and flus- tered, and his face grew red as he spoke directly to Patty, "You said these kids knew what they were doing. is is laughable. Why do I need to charge this much?" Patty appeared angry and said firmly, "Matt, I told you not to over-react, and to listen to the analysis they performed. What you said was insulting." Clearly chastened, Matt replied, "Okay, you're right. Proceed." Still, he appeared very skeptical. Sue resumed. "Your operators and engi- neers have a health care benefits package and a 401K. In addition, you have to pay Social Secu- rity, Medicare, and a few miscellaneous things. Your accountant confirms that this alone is a 45% adder." "Wow, that's already beyond my 40% adder," Matt said sheepishly. "I feel like a big dummy." "You have two purchasing agents, and these add $1.74 to each worker per hour, and a