## 6

- A

- i 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 ESTIMATION OF CONTRA CTOR MARK

- UP BY STATE

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

- A

- 6

6

- A.5 DETAILED MANUFACTURE D HOME CONTRACTOR CO ST DATA

......... 6

- A

- 9

6

- A.6 STATE SALES TAX RATE S

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

- A

- 11

LIST OF TABLES

Table 6

- A.1.1 Disaggregated Costs and Expenses for Wholesalers

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

- A

- 1

Table 6

- A.2.1 Mechanical Contractor Expenses and Markups Used To Scale the

Incremental Markups

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

- A

- 3

Table 6

- A.3.1 General Contractor Expenses and Markups

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

- A

- 5

Table 6

- A.4.1 Mechanical Contractor Markup Estimation by State, 2007

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

- A

- 6

Table 6

- A.4.2 Residential General Contractor Baseline Markups by State, 2007

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

- A

- 8

Table 6

- A.5.1 Manufactured Home Contractor Expenses and Markups

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

- A

- 10

Table 6

- A.6.1 State Sales Tax Rates

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

- A

- 11

## 6

- A

- 1 APPENDIX 6

- A. DETAILED DATA FOR EQ UIPMENT PRICE MARKUP S

6

- A.1 DETAILED WHOLESALER COST DATA

Based on data provided by the Heating Air

- conditioning & Refrigeration Distributors

International (HARDI), Table 6. 4 .1 of chapt er 6 shows wholesaler revenues and costs in

aggregated form. Table 6

- A.1.1 below provides the complete breakdown of costs and expenses

. The column labeled “Scaling” in Table 6

- A.1.1 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. As described in chapter 6, section 6. 4 , only 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.1.1 Disaggregated Costs and Expenses for Wholesalers

Item Percent of Revenue

% Scaling

Cost of Goods Sold 73. 5

Gross Margin 2 6

. 5

Payroll Expenses 1 5.0 Baseline

Executive Salaries & Bonuses 1. 6

Branch Manager Salaries and Commissions 1. 3

Sales Executive Salaries & Commissions 0. 4

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 0.2

Warehouse Salaries/Wages 1. 4

Accounting 0.5

Delivery Salaries/Wages 0. 8

All Other Salaries/Wages & Bonuses 0. 7

Payroll Taxes 1.1

Group Insurance 1. 1

Benefit Plans 0.4

Occupancy Expenses 3. 6 Baseline

Utilities: Heat, Light, Power, Water 0.4

Telephone 0.3

Building Repairs & Maintenance 0. 3

Rent or Ownership in Real Estate 2. 6

## 6

- A

- 2 Other Operating Expenses 5.4 Baseline & Incremental

Advertising & Promotion 0. 9

Insurance (business liability & casualty) 0.2

Depreciation 0.4

Vehicle Expenses 1. 2

Personal Property Taxes/Licenses 0. 2

Collection Expenses 0.3

Bad Debt Losses 0. 4

Data Processing 0.3

All Other Operating Expenses 1.5

Total Operating Expenses 2 4.0

Operating Profit 2.5 Baseline & Incremental

Other Income 0. 4

Interest Expense 0. 5

Other Non

- operating Expenses 0.0

Profit Before Taxes 2.4

Source: Heating, Air

- co nditioning & Refrigeration Distributors International. 2011

. 2011 Profit Report ( 2010 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

. 5 .1.



## 6

- A.2 DETAILED MECHANICAL CONTRACTOR DATA

Tables 6. 4 .2, 6. 4 .3, and 6. 4 .4 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 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.2.1 by both dollar value and percentage terms from the 2007 Census of

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

- A.2.1

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

- 3 Table 6

- A.2.1 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 employees 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

- 4 6

- A.3 DETAILED GENERAL CON TRACTOR COST DATA

Based on U.S. Department of Census dat a, Table 6. 4 .6 of c hapter 6, section 6. 4

, General

Contractor Expenses and Markups shows general contractor revenues and costs in aggregated

form. Table 6

- A.3.1 below shows the complete breakdow n of costs and expenses provided by the

U.S. Department of Census. The column labeled “Scaling” in Table 6

- A.3.1 indicates which

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

the baseline and incremental markups. As described in c hapter 6, section 6. 4 , only those

expenses that scale with baseline and incremental costs are marked up when there is an

incremental chang e in eq uipment costs.

## 6

- A

- 5 Table 6

- A.3.1 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 employees 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: 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

- 6 6

- A.4 ESTIMATION OF CONTRA CTOR MARK

- UP BY STATE

Table 6

- A.4.1 Mechanical Contractor Markup Estimation by State, 2007

State Value of

Const

. $1,000 Cost of

Goods

Sold

$ 1, 000 Baseline

MU Incremental

MU Replacem

ent

Baseline

MU Replacement

Incremental

MU New Const

. Baseline

MU New Const

. Incremental

MU

Alabama 2,010,305 1,401,223 1.435 1.148 1.498 1.198 1.393 1.114

Alaska 583,171 344,729 1.692 1.353 1.766 1.413 1.642 1.314

Arizona 3,522,116 2,326,475 1.514 1.211 1.580 1.264 1.470 1.176

Arkansas 1,065,754 743,395 1.434 1.147 1.496 1.197 1.392 1.113

California 16,726,969 10,865,201 1.539 1.232 1.607 1.286 1.495 1.196

Colorado 3,056,988 2,084,454 1.467 1.173 1.531 1.225 1.424 1.139

Connecticut 1,704,668 1,135,871 1.501 1.201 1.566 1.253 1.457 1.166

Delaware 481,900 D 1.421 1.137 1.483 1.186 1.379 1.104

District of

Columbia 34,600 D 1.458 1.167 1.522 1.218 1.416 1.133

Florida 9,061,426 6,254,391 1.449 1.159 1.512 1.210 1.407 1.125

Georgia 4,700,799 3,329,842 1.412 1.129 1.474 1.179 1.371 1.096

Hawaii 800,221 455,122 1.758 1.407 1.835 1.468 1.707 1.366

Idaho 900,698 617,165 1.459 1.168 1.523 1.219 1.417 1.133

Illinois 7,641,642 5,058,047 1.511 1.209 1.577 1.262 1.467 1.173

Indiana 4,002,323 2,605,238 1.536 1.229 1.604 1.283 1.491 1.193

Iowa 1,868,483 1,305,883 1.431 1.145 1.493 1.195 1.389 1.111

Kansas 1,395,359 966,707 1.443 1.155 1.507 1.205 1.401 1.121

Kentucky 1,747,925 1,157,360 1.510 1.208 1.576 1.261 1.466 1.173

Louisiana 1,997,044 1,317,429 1.516 1.213 1.582 1.266 1.472 1.177

Maine 580,816 394,847 1.471 1.177 1.535 1.228 1.428 1.142

Maryland 5,329,135 3,739,560 1.425 1.140 1.487 1.190 1.383 1.107

Massachusetts 4,099,301 2,781,377 1.474 1.179 1.538 1.231 1.431 1.145

Michigan 4,420,638 3,015,948 1.466 1.173 1.530 1.224 1.423 1.138

Minnesota 3,402,921 2,315,330 1.470 1.176 1.534 1.227 1.427 1.141

Mississippi 1,025,452 715,571 1.433 1.146 1.496 1.197 1.391 1.113

Missouri 3,335,124 2,353,598 1.417 1.134 1.479 1.183 1.376 1.101

Montana 483,578 345,458 1.400 1.120 1.461 1.169 1.359 1.087

Nebraska 1,004,296 755,338 1.330 1.064 1.388 1.110 1.291 1.033

Nevada 2,327,842 1,600,555 1.454 1.164 1.518 1.214 1.412 1.130

New

Hampshire 620,761 D 1.472 1.178 1.537 1.230 1.429 1.144

New Jersey 5,062,336 3,337,013 1.517 1.214 1.583 1.267 1.473 1.178

## 6

- A

- 7 New Mexico 891,914 595,659 1.497 1.198 1.563 1.250 1.454 1.163

New York 10,364,779 6,760,337 1.533 1.227 1.600 1.280 1.488 1.191

North

Carolina 5,111,396 3,631,802 1.407 1.126 1.469 1.175 1.366 1.093

North Dakota 360,683 255,057 1.414 1.131 1.476 1.181 1.373 1.098

Ohio 5,618,591 3,809,806 1.475 1.180 1.539 1.231 1.432 1.145

Oklahoma 1,352,943 924,264 1.464 1.171 1.528 1.222 1.421 1.137

Oregon 1,893,678 1,237,956 1.530 1.224 1.597 1.277 1.485 1.188

Pennsylvania 6,487,476 4,579,367 1.417 1.133 1.479 1.183 1.375 1.100

Rhode Island 631,202 410,653 1.537 1.230 1.604 1.284 1.492 1.194

South

Carolina 1,991,303 1,326,690 1.501 1.201 1.567 1.253 1.457 1.166

South Dakota 386,186 239,017 1.616 1.293 1.686 1.349 1.569 1.255

Tennessee 2,595,613 1,834,242 1.415 1.132 1.477 1.182 1.374 1.099

Texas 10,810,308 7,532,064 1.435 1.148 1.498 1.198 1.393 1.115

Utah 1,746,398 1,235,004 1.414 1.131 1.476 1.181 1.373 1.098

Vermont 294,806 D 1.472 1.178 1.537 1.230 1.429 1.144

Virginia 4,623,151 3,099,329 1.492 1.193 1.557 1.246 1.448 1.158

Washington 4,111,543 2,734,093 1.504 1.203 1.570 1.256 1.460 1.168

West Virginia 655,100 D 1.464 1.171 1.528 1.222 1.421 1.137

Wisconsin 2,926,545 2,023,634 1.446 1.157 1.510 1.208 1.404 1.123

Wyoming 289,391 198,105 1.461 1.169 1.525 1.220 1.418 1.135

Sources: U.S. Bureau of the Census. American Factfinder : 2007. Sector 23: Plumbing, Heating, and Air

- Conditioning Contractors ( NAICS

238220 ), Detailed Statistics for Establishments: 2007

http://factfinder.census.gov/servlet/IBQTable?_bm=y&

- ds_name=EC0723A1&

- NAICS2007=238220&

- _lang=en and

Geographic Area Series: Detailed Sta tistics for Establishments: 2007.Notes: The Census Bureau withheld data for some states.

Markups may vary across states for several reasons, including differences in firm size.

Due to sample size and/or magnitude of reporting error relative to the mean, disaggregated information not provided for all of the Subcontract,

Materials, and Fuels fields. In these cases, the state markup ratio is calcul a ted as an average of neighboring states (ex. Delaware, District of

Columbia, New Hampshire, Vermont and West Vi rginia)

## 6

- A

- 8 Table 6

- A.4.2 Residential General Contractor Baseline Markups by State, 2007

State Va lue of Residential

Construction

$ 1, 000 Cost of

Goods Sold

$1,000 Baseline

Markup Incremental

Markup

Alabama 4,232,349 3,106,308 1.363 1.234

Alaska 598,572 322,897 1.854 1.678

Arizona 14,743,264 8,636,727 1.707 1.546

Arkansas 821,493 638,546 1.287 1.165

California 49,325,592 28,727,843 1.717 1.555

Colorado 9,711,667 6,478,218 1.499 1.357

Connecticut 2,835,015 1,914,706 1.481 1.341

Delaware 912,121 714,609 1.276 1.156

District of Columbia 177,004 115,545 1.532 1.387

Florida 33,290,091 21,780,175 1.528 1.384

Georgia 12,492,752 8,745,668 1.428 1.293

Hawaii 2,739,122 1,933,143 1.417 1.283

Idaho 2,565,176 2,014,522 1.273 1.153

Illinois 13,035,923 8,206,105 1.589 1.438

Indiana 4,637,976 3,418,576 1.357 1.228

Iowa 1,846,602 1,449,114 1.274 1.154

Kansas 1,940,745 1,443,265 1.345 1.217

Kentucky 3,074,656 2,244,283 1.370 1.240

Louisiana 2,429,529 1,650,884 1.472 1.332

Maine 821,980 630,393 1.304 1.181

Maryland 6,616,960 4,635,717 1.427 1.292

Massachusetts 7,693,991 5,728,767 1.343 1.216

Michigan 5,383,752 3,501,797 1.537 1.392

Minnesota 5,558,816 3,847,679 1.445 1.308

Mississippi 1,241,083 939,692 1.321 1.196

Missouri 4,754,552 3,588,694 1.325 1.200

Montana 1,148,453 919,206 1.249 1.131

Nebraska 577,746 424,822 1.360 1.231

Nevada 6,697,489 4,026,111 1.664 1.506

New Hampshire 292,227 228,854 1.277 1.156

New Jersey 8,492,015 5,649,618 1.503 1.361

New Mexico 2,236,262 1,395,073 1.603 1.451

New York 16,958,113 12,176,837 1.393 1.261

## 6

- A

- 9 North Carolina 16,254,736 11,579,895 1.404 1.271

North Dakota D D 1.331 1.205

Ohio 6,788,825 4,883,462 1.390 1.259

Oklahoma 1,419,859 1,075,586 1.320 1.195

Oregon 5,519,819 4,019,693 1.373 1.243

Pennsylvania 9,971,624 7,323,399 1.362 1.233

Rhode Island 309,403 205,383 1.506 1.364

South Carolina 5,921,453 4,350,205 1.361 1.232

South Dakota 297,424 228,839 1.300 1.177

Tennessee 5,243,037 3,874,974 1.353 1.225

Texas 32,123,700 21,429,103 1.499 1.357

Utah 4,201,276 3,095,214 1.357 1.229

Vermont 527,837 387,905 1.361 1.232

Virginia 12,761,751 8,799,880 1.450 1.313

Washington 11,158,559 7,361,497 1.516 1.372

West Virginia 348,291 225,500 1.545 1.398

Wisconsin 3,820,533 2,850,921 1.340 1.213

Wyoming 524,809 418,215 1.255 1.136

Sources: U.S. Bureau of the Census, American Factfinder. 2007 Economic Census. Sector 23: Subsectors 236115 (residential single

- family),

236116 (residential multifamily), 236117 (operative builders), and 236118 (residential remodelers). Sector 23: EC0723A1: Con struction:

Geographic Area Series: Detailed Statistics for Establishment s: 2007.Notes: The Census Bureau withheld data for some states.

Markups may vary across states for several reasons, including differences in firm size.

Due to sample size and/or magnitude of reporting error relative to the mean, disaggregated information n ot provided for all of the Subcontract,

Materials, and Fuels fields. In these cases, the state markup ratio is calcul a ted as an average of neighboring states (ex. North Dakota)

.



## 6

- A.5 DETAILED M ANUFACTURED HOME CONTRACTOR COST DATA

Based on U.S. Department of Census dat a, Table 6. 6 .1 of c hapter 6, section 6. 6

, Mobile

Home Contractor Expenses and Markups shows mobile home contractor revenues and costs in

the new construction market in aggregated form. Table 6

- A.5.1 below shows the complete

breakdown of costs and expenses provided by the U.S. Department of Census. The column

labeled “Scaling” in Table 6

- A.5.1 indicates which expenses DOE assumed to scale with only

the baseline markup and which scaled with both the baseline and incremental markups. As

described in c hapter 6, section 6. 6’ , only those expenses that sc ale with baseline and incremental

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

## 6

- A

- 10 Table 6

- A.5.1 M anufactured Home Contractor Expenses and Markups

Item Dollar Value

$1,000 Percentage

% Scaling

Total Cost of Equipment Sales 24,179,613 62.28

Total payroll, construction workers wages 6,080,876 15.66

Cost of materials, components, and supplies 13,286,037 34.22

Cost of construction work subcontracted out to others 3,518,810 9.06

Total cost of selected power, fuels, and lubricants 1,293,890 3.33

Gross Margin 14,642,247 37.72

Payroll Expenses 5,781,123 14.89

Baseline Total payroll, other employees wages 3,356,617 8.65

Total fringe benefits 2,308,395 5.95

Temporary staff and leased employee expenses 116,111 0.30

Occupancy Expenses 1,336,627 3.44

Baseline

Rental costs of machinery and equipment 479,044 1.23

Rental costs of buildings 308,998 0.80

Communication services 159,667 0.41

Cost of repair to machinery and equipment 388,918 1.00

Other Operating Expenses 4,271,324 11.00

Baseline &

Incremental Purchased professional and technical services 199,499 0.51

Data processing and other purchased computer services 23,427 0.06

Expensed computer hardware and other equipment 58,000 0.15

Expensed purchases of software 17,214 0.04

Advertising and promotion services 325,459 0.84

All other expenses 1,747,725 4.50

Refuse removal (including hazardous waste) services 47,861 0.12

Taxes and license fees 317,376 0.82

Total depreciation ($1,000) 1,534,763 3.95

Net Profit Before Income Taxes 3,253,173 8.38 Baseline &

Incremental

Source: U.S. Census Bureau. 2007. All Other Specialty Trade Contractor . Sector 23: 238990 . Construction, Industry Series, Preliminary Detailed

Statistics for Establishments: 2007.

Note: Mobile home 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 6.7.1

.

## 6

- A

- 11 6

- A.6 STATE SALES TAX RATE S

Table 6

- A.6.1 State Sales T ax Rates

State Combined State

and Local Tax

Rate

% State Combined State

and Local Tax

Rate

% State Combined State

and Local Tax

Rate

%

Alabama 8.25 Kentucky 6.00 North Dakota 5.85

Alaska 1.4 5 Louisiana 8.75 Ohio 6.80

Arizona 8.15 Maine 5.00 Oklahoma 8.20

Arkansas 8. 3 5 Maryland 6.00 Oregon

--

California 8.20 Massachusetts 6.25 Pennsylvania 6.40

Colorado 6.40 Michigan 6.00 Rhode Island 7.00

Connecticut 6.35 Minnesota 7.20 South Carolina 7.15

Delaware

-- Mississippi 7.00 South Dakota 5.50

Dist. of Columbia 6.00 Missouri 7.25 Tennessee 9.45

Florida 6.65 Montana

-- Texas 8.00

Georgia 6.9 0 Nebraska 6.00 Utah 6.70

Hawaii 4. 40 Nevada 7.85 Vermont 6.05

Idaho 6.05 New Hampshire

-- Virginia 5.00

Illinois 8.10 New Jersey 6.95 Washington 8.80

Indiana 7.00 New Mexico 6. 60 West Virginia 6.00

Iowa 6.85 New York 8.45 Wisconsin 5.45

Kansas 8.05 North Carolina 6.85 Wyoming 5. 35

Source: The Sales Tax Clearinghouse at https://thestc.com/STRates.stm (Assessed on January 04, 2012 )