In estimating, how do standard labor rate and shop-time estimates differ?

• A. They are identical.
• B. Labor rate is per part; shop-time per vehicle.
• C. The standard labor rate is the hourly charge; shop-time estimates are the projected hours to complete the repair used to calculate labor cost.
• D. Shop-time includes parts costs.

Answer: (C)

The key idea is that the standard labor rate and shop-time estimates are two different inputs that come together to compute labor cost. The standard labor rate is the hourly charge the shop applies for labor. Shop-time is the estimated number of hours required to complete the repair. To get the labor cost, you multiply the projected hours (shop-time) by the hourly rate (standard labor rate). For example, 4 hours at $85 per hour equals $340 in labor cost. The rate is a price per hour, not per part, and time is a measure of hours, not dollars, and it doesn’t include parts costs by itself.