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this is related to question 45 in BPP exam kit: GH consultancy
2 questions:
1. in the services rate calculated, why have their salaries not been included?
2. in calculating the travelling time (which is supposed to be 1/3 of the services fee rate), weighted hours are taken. what is the rationale behind this as opposed to a simple fraction?
thanks
This is a very badly worded question by BPP (the first part of the first sentence of the third paragraph does not actually make sense!!).
They answer effectively assumes that their salaries are included in the costs given at the end (even through the question refers to them as ‘other costs’.
With regard to the travelling time, that bit is correct.
The total of $62,100 does need splitting into a rate per productive hour, and a rate per travelling hour (which is 1/3 of rate per productive hours).
For every 1890 hours chargeable, 75% (1417.5 hours) will be charged at full rate and the other 25% (472.5 hours) will be charged at 1/3 rate. Charging 1/3 rate on 472.5 hours will be the same amount as charging full rate on 157.5 hours. So if we take 1417.5 + 157.5 = 1575 hours and divide this into the cost, this will give the full rate per hour to be charged.
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