### APPENDIX 6

- A. DETAILED DATA FOR EQ UIPMENT PRICE MARKUP S

TABLE OF CO NTENTS

6

- A.1 DETAILED WHOLESALER COST DATA

................................ ........................ 6

- A

- 1

6

- A.2 DETAILED MECHANICAL CONTRACTOR DATA

................................ ........ 6

- A

- 2

6

- A.3 DETAILED GENERAL CON TRACTOR COST DATA

................................ ..... 6

- A

- 4

6

- A.4 STATE SALES TAX RATE S

................................ ................................ ............... 6

- A

- 5

LIST OF TABLES

Table 6

- A

- 1 Disaggregated Costs and Expenses for Wholesalers

................................ . 6

- A

- 1

Table 6

- A

- 2 Mechanical Contractor Expenses and Markups Used To Scale the

Incremental Markups

................................ ................................ ................. 6

- A

- 3

Table 6

- A

- 3 Residential General Contractor Expenses and Markups

............................ 6

- A

- 4

Table 6

- A

- 4 State Sales Tax Rates

................................ ................................ ................. 6

- A

- 5

6

- A

- i

### APPENDIX 6

- A. DETAILED DATA FOR EQ UIPMENT PRICE MARKUPS

6

- A.1 DETAILED WHOLESALER COST DATA

Based on data provided by the Heating Air

- conditioning & Refrigeration Distributors

International (HARDI), Table 6.5

- 2 of chapter 6 shows wholesaler revenues and costs in

aggregated form. Table 6

- A

- 1 in this appendix provides the complete breakdown of costs and

expenses

. The column labeled “Scaling” in Table 6

- A

- 1 indicates which expenses the U.S.

Department of Energy (DOE) assumed to scale with only the baseline markup and which with

both the baseline and incremental markups. O nly those expenses that scale with both baseline

and incremental costs are marked up when there is an incremental change in equipment costs.

Table 6

- A

- 1 Disaggregated Costs and Expenses for Wholesalers

Item Percent of Revenue

% Scaling

Cost of Goods Sold 73. 7

Gross Margin 2 6

. 3

Payroll Expenses 1 5. 1 Baseline

Executive Salaries & Bonuses 1.7

Branch Manager Salaries and Commissions 1.5

Sales Executive Salaries & Commissions 0.5

Outside Sales Salaries & Commissions 2.1

Inside/Counter Sales/Wages 2.8

Purchasing Salaries/Wages 0.4

Credit Salaries/Wages 0.2

IT Salaries/Wages 0.1

Warehouse Salaries/Wages 1.4

Accounting 0.5

Delivery Salaries/Wages 0.7

All Other Salaries/Wages & Bonuses 0.8

Payroll Taxes 1.0

Group Insurance 1.1

Benefit Plans 0.3

Occupancy Expenses 3. 6 Baseline

Utilities: Heat, Light, Power, Water 0.4

Telephone 0.3

Building Repairs & Maintenance 0.2

Rent or Ownership in Real Estate 2.7



### 6

- A

- 1Item Percent of Revenue

% Scaling

Other Operating Expenses 5. 5 Baseline & Incremental

Sales Expenses (incl. a dvertising & p romotion ) 0. 9

Insurance (business liability & casualty) 0.2

Depreciation 0.4

Vehicle Expenses 1.4

Personal Property Taxes/Licenses 0.1

Collection Expenses 0.3

Bad Debt Losses 0.2

Data Processing 0.3

All Other Operating Expenses 1.7

Total Operating Expenses 2 4. 2

Operating Profit 2. 1 Baseline & Incremental

Other Income 0. 4

Interest Expense 0. 5

Other Non

- operating Expenses 0.0

Profit Before Taxes 2. 0

Source: Heating, Air

- co nditioning & Refrigeration Distributors International. 2012

. 2012 Profit Report ( 2011 Data).

Note: The wholesaler costs and expenses are percentage values as opposed to the per

- dollar of sale s revenue values shown in Table 6

. 4 .1.



### 6

- A.2 DETAILED MECHANICAL CONTRACTOR DATA

Ta bles 6.5

- 4 and Table 6.5

- 5 of chapter 6 provide mechanical contractor revenues and

costs in aggregated form by ‘Cost of Goods Sold’ and ‘Gross Margin.’ The tables are based on

data in the 2005 edition of Financial Analysis for the HVACR Contracting Industry

, published by

the Air Conditioning Contractors of America (ACCA). The ACCA report did not provide a

more disaggregate d tabulation of these costs and expenses. As in section 6

- A.1 , the gross margin

category was assumed to scale only with the baseline markup.

A further disaggregated breakdown of costs used to scale the incremental markup are

shown in Table 6

- A

- 2 by both dollar value and percentage terms from the 2007 Census of

Business. As the ACCA data were used to calculate the baseline markup, in Table 6

- A

- 2 only the

categories in the ‘Scaling’ column that are scaled with both the baseline and incremental

markups are marked when there is an incremental change in equipment costs.

6

- A

- 2

### Table 6

- A

- 2 Mechanical Contractor Expenses and Markups Used To Scale the

Incremental Markups

Item Dollar Value

$1,000 Percentag e

% Scaling

Total Cost of Equipment Sales 107,144,428 67.80

Total payroll, construction workers wages 31,373,558 19.85

Cost of materials, components, and supplies 59,023,964 37.35

Cost of construction work subcontracted out to others 13,646,192 8.63

Total cost of selected power, fuels, and lubricants 3,100,714 1.96

Gross Margin 50,895,129 32.20

Payroll Expenses 28,065,632 17.76

Baseline Total payroll, other employee wages 14,041,336 8.88

Total fringe benefits 13,585,040 8.60

Temporary staff and leased employee expenses 439,256 0.28

Occupancy Expenses 3,436,208 2.17

Baseline Rental costs of machinery and equipment 1,047,026 0.66

Rental costs of buildings 1,231,263 0.78

Communication services 640,851 0.41

Cost of repair to machinery and equipment 517,068 0.33

Other Operating Expenses 12,671,194 8.02

Baseline &

Incremental Purchased professional and technical services 843,641 0.53

Data processing and other purchased computer services 98,016 0.06

Expensed computer hardware and other equipment 255,474 0.16

Expensed purchases of software 64,195 0.04

Advertising and promotion services 1,018,265 0.64

All other expenses 6,944,674 4.39

Refuse removal (including hazardous waste) services 153,241 0.10

Taxes and license fees 996,138 0.63

Total depreciation ($1,000) 2,297,550 1.45

Net Profit Before Income Taxes 6,722,095 4.25 Baseline &

Incremental

Source: U.S. Census Bureau. 200 7 . Plumbing, Heating, and Air

- Conditioning Contractors: 200 7

. Sector 23: 238220

. Construction: Geographic

Area Series. Detailed Statistics for Establishments: 200 7

. Note: Mechanical contractor costs and expenses are first presented as total dollar values and th e n converted to percentage values. This is in

contrast to the c ost per dollar of sales revenue values shown in Table 6

. 5

. 2

.



### 6

- A

- 3

### 6

- A.3 DETAILED GENERAL CONTRACTOR COST DATA

Based on U.S. Department of Census data, Table 6.5

. 7 of chapter 6 shows residential

building general contractor revenues and costs in aggregated form. Table 6

- A

- 3 shows the

complete breakdown of costs and expenses of residential building contractor provided by the

U.S. Department of Census. The column labeled “Scaling” indicates which expenses DOE

assumed to scale with only the baseline markup and which are scaled with both the baseline and

incremental markups. O nly those expenses that scale with baseline and incremental costs are

marked up when there is an incremental chang e in equipment costs.

Table 6

- A

- 3 Residential General Contractor Expenses and Markups

Item Dollar Value

$1,000 Percentage

% Scaling

Total Cost of Equipment Sales 238,431,389 67.55

Total payroll, construction workers wages 16,629,321 4.71

Cost of materials, components, and supplies 126,764,975 35.91

Cost of construction work subcontracted out to others 90,956,668 25.77

Total cost of selected power, fuels, and lubricants 4,080,425 1.16

Gross Margin 114,558,247 32.45

Payroll Expenses 28,806,792 8.16

Baseline Total payroll, other employee wages 20,843,029 5.90

Total fringe benefits 7,464,670 2.11

Temporary staff and leased employee expenses 499,093 0.14

Occupancy Expenses 3,558,796 1.01

Baseline

Rental costs of machinery and equipment 572,783 0.16

Rental costs of buildings 1,532,841 0.43

Communication services 810,436 0.23

Cost of repair to machinery and equipment 642,736 0.18

Other Operating Expenses 21,341,175 6.05

Baseline &

Incremental Purchased professional and technical services 1,834,816 0.52

Data processing and other purchased computer services 141,344 0.04

Expensed computer hardware and other equipment 261,701 0.07

Expensed purchases of software 105,338 0.03

Advertising and promotion services 2,544,687 0.72

All other expenses 10,840,757 3.07

Refuse removal (including hazardous waste) services 520,907 0.15

Taxes and license fees 1,791,539 0.51

Total depreciation ($1,000) 3,300,086 0.93

Net Profit Before Income Taxes 60,851,484 17.24 Baseline &

Incremental

Source: U.S. Census Bureau. 2007. Residential Building Construction. Sector 23 , EC0723I1 : 236115 through 236118. Construction, Industry

Series, Preliminary Detailed Statistics for Establishments: 2007.

Note: G eneral contractor costs and expenses are first presented as total dollar values and then converted to percentage values. This is in contrast

to the cost per dollar of sales revenue values shown in Table 6.5.6.



### 6

- A

- 4

### 6

- A.4 STATE SALES TAX RATE S

Table 6

- A

- 4 State Sales Tax Rates

State Combined State

and Local Tax

Rate

% State Combined State

and Local Tax

Rate

% State Combined State

and Local Tax

Rate

%

Alabama 8.55 Kentucky 6.00 North Dakota 5. 95

Alaska 1.35 Louisiana 8.75 Ohio 7.05

Arizona 7 .15 Maine 5.00 Oklahoma 8. 40

Arkansas 8. 90 Maryland 6.00 Oregon

--

California 8. 45 Massachusetts 6.25 Pennsylvania 6.40

Colorado 6.10 Michigan 6.00 Rhode Island 7.00

Connecticut 6.35 Minnesota 7. 2 0 South Carolina 7. 20

Delaware

-- Mississippi 7.00 South Dakota 5. 40

Dist. of Columbia 6.00 Missouri 7.45 Tennessee 9. 4 5

Florida 6.65 Montana

-- Texas 7.95

Georgia 7.10 Nebraska 6.00 Utah 6.70

Hawaii 4. 40 Nevada 7.85 Vermont 6.05

Idaho 6.05 New Hampshire

-- Virginia 5. 60

Illinois 8.05 New Jersey 6.95 Washington 8. 90

Indiana 7.00 New Mexico 6. 60 West Virginia 6. 05

Iowa 6.85 New York 8. 40 Wisconsin 5.45

Kansas 7.90 North Carolina 6. 90 Wyoming 5. 50

Source: The Sales Tax Clearinghouse at https://thestc.com/STRates.stm (A cc essed on September 11 , 201 3 )

.



### 6

- A

- 5