• The correct answer is \$36,600.

\$50 x 3.05 (Direct Salary Expense Multiplier or DSE, which is Direct Salary + Indirect Salary + Profit / Direct Salary, is the amount the firm has to charge to pay staff, overhead and make a profit).

In the question, the firm budgeted for DD at 1000 hours or \$152,500. That is \$50 x 3.05 DSE x 1000 hours.

Since the firm went over 240 hours and apparently charge the client for that... the solution is 240 hours x DSE or \$36,600.

• I totally agree with Nathalie. The question has said "billing rate" not just "the rate" and the billing rate is what we charge the client and has already multiplied by the multiplier. Although low, \$50 is what the question says they charge the client. It shouldn't be multiplied again for the profit and overhead.

• If \$152,500 is for 1000 hrs, so each billing hour is \$152.50 and divided by the Net Multiplier (3.05) = \$50 (hourly rate)

Additional 240 hrs x \$152.50 = \$36,600.

Yes, I know it was a tricky question, but you'll get the answer if you check the maths. I passed the PcM, too, and I learned that maths is the best way to resolve it beyond the words in this type of question.

• Nathalie,

I think you are correct. I happened to get this one right on the practice exam. I wasn't sure if it meant billing rate or the payment received by the employee, so I did some math to check.

50 x 1000 hours = \$50,000 total DD phase fee. The question clearly states it's \$152,500  total DD phase fee

But,

50 x 3.05 = 152.5

152.5 x 1000 hours = \$152,500

So now things line up.

The language is tricky, but the math doesn't lie. It's pretty annoying, but to pass the exams I find that we need to read the questions like lawyers reviewing a contract and call out the slightest discrepancy. Be ready for anything!

P.S. I know I'm pretty late to this discussion, but I hope you passed!