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Question: Jones Closers specializes in closing residential mortgage transactions. The company employs a large number of people; some individuals specialize in overseeing the final session, where the details of the loan are finalized and the borrower(s) are typically present to execute the documents. Jones allows two hours for each closing, and the standard cost for a two-hour session is $50. The two-hour standard time includes breaks for the staff. During the last year, in response to more requirements and stricter enforcement of existing requirements, the staff closed 1,200 loans in 3,200 hours.
Assuming no change in labor costs and a workforce that is no less or no more efficient than the workforce in place when the standard was established, estimate the cost to Jones of the added requirements and increased scrutiny. Be sure to show your work and/or explain how you computed your answer.
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