PcM - Overhead rate question

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    Steven Bohlman

    Here is my thinking:

    A) Reimbursable expenses that are not billed to clients would contribute to overhead. Reviewing them would hopefully find expenses that can be billed, reducing overhead. 

    B) Monitoring unbillable time means that it can be reduced.  This is like looking at each employee's utilization rate.  A higher utilization rate would be less indirect expenses.

    C) Being vigilant in fee collection will not reduce overhead, just increase the revenue you should already be getting this answer is out. 

    D) Increase revenue per technical staff. Again just increasing revenue not decreasing overhead.  Jim works 40hrs 20billable 20 unbillable.  He is able to increase his revenue by working 60hrs. 40billable 20 unbillable. Overhead remains the same. this answer is out. 

    E) Move to a cheaper office. Reduces rent, Reduces overhead. This one works for sure. 

    F) Ask Admin to check their direct expenses.  This could work if there are Admin who could be billing some of their time as direct expenses to projects but are not and thus the time is going to overhead when it shouldn't.  

    I would choose the best answers as B and E,  But A and F are also probably likely to reduce overhead. 

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    Paul Carson (Edited )

    This is great Steven ~ You have clearly stated a precise logic with detail that I will learn from; as I also just realized that I actually guessed B,E, & F., and simply wrote it down wrong, and also wrote it down wrong here on the forum.  So yes, B & E are what I do remember from your logic, well done and thank you!; however, I also had "F" initialized and mixed up my notes, AGAIN.

    I am now confident that my notes were "guessing" B & E, and will push forward with this logic if no one else chimes in.

    Best and thank you!

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    Haytham Abdelrahman Abdelall (Edited )

    Review reimbursable won't affect the overhead factor as reimbursable expenses is not part from Indirect Expenses or Indirect labor. Reimbursable expanses usually is excluded from NOR, so A should be eliminated. 

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    Rabeea Alkhazraji

    same question found in Ballast practice exam --- B, E & F

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