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Hi
In the model answer, the cost per chargeable consultation for full time consultants, where does the answer come from? e.g advertising 277.55
total salaries plus operating costs/chargeable days =
800,000 + 1,075,000/3720 = 504.03?Also cost for subcontractors where does the figures come from e.g Advertising 335.71? cost of subcontractors = 144,000 but where does number of subcontractors come from?
Thanks
I will answer this, but I am away without good internet access. It will be looked at on Thursday.
Advertising (20Y0):
Salaries = 800,000 (20 x 40,000). That’s the easy part.
Operating costs now have to be spread over chargeable consultations. The number of chargeable consultations per year are: 20 x 200 x (100 – 7)% + 30 x 200 x (100 – 22)% + 50 x 200 x (100 – 12)% = 17,200.
For advertising, the apportioned operating costs will therefore be 1,075,000 x 20 x 200 x (100 – 7)%/17,200 = 232,500.
Total of salaries and apportioned op costs = 1,032,500.
Chargeable consultations = 20 x 200 x (100 – 7)% = 3,720
1,032,500/3,720 = 277.55.
For sub-contractors:
Direct Cost = 300/consultation
Subcontractor consul6ations/year =.4,200 – 20 x 200 x (100 – 7)% + 6,250 – 30 x 500 x (100 – 22)% + 10,250 – 50 x (100 – 12)% = 3,500
Other operating costs costs per sub-contractor = 125,000/3,500 = 35.71.
Total cost = 300 + 35.71 = 335.71.
This is not the style of question now asked in P5. Now there is less calculation and more interpretation.
Sorry for the delay in replying.
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