Question 3.C: Estimate the cost of an oil change (5 quarts of oil) and a n...

Engineering Economy [EXP-20136]

Estimate the cost of an oil change (5 quarts of oil) and a new oil filter for your automobile at a local service station. It takes a technician 20 minutes to do this job. Compare your estimate with the actual cost of an oil change at the service station. What percent markup is being made by the service station?

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One possible solution:
The cost of an oil and filter change would be approximately: five quarts of oil ($5.50), oil filter ($4.75), labor ($4.00), and building/equipment ($3.00). This totals $17.75. The actual cost of an oil and filter change is around $20, which leaves a profit of $2.25 for the service station owner. This is a markup of 12.7% by the station. The station will make even more money when you need new wiper blades, a replacement tail-light, new fan belts, and so on. The $20 oil change turns into a $75 visit fairly quickly. Does this sound familiar?

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