• Hourly rate = 32.75 x 52 x 40 = \$68,120.00  = 100%

Utilization rate = 75%:

Total labor: \$68,120.00

Direct labor: \$68,120.00 x 0.75= \$51,090

Indirect labor: \$68,120 – 51,090 = \$17,030

Projected billing: \$163,488

Utilization rate = 65%:

Total labor: \$68,120.00

Direct labor: \$68,120.00 x 0.65 = \$44,278

Indirect labor: \$68,120 – 44,278 = \$23,842

Projected billing: \$141,690

• Thanks, Valerie. So I'm clear, the Billing Rate wouldn't change since we don't know what the multiplier is?

• (Edited )

Net multiplier is the ratio of net operating revenue (NOR) to total direct labor:

113,568 / 35,490 = 3.2

210,912 / 65,910 = 3.2

123,189 / 38,497 = 3.2

134,687 / 42,090 = 3.2

Net multiplier is 3.2 and it's a constant uniform number.

• Thanks, Valerie!

• 1) 2080*.75 = 1560 chargeable hours
2) 75000 direct salary /.75 = \$100000 is the employees salary

• 100000/2080 = \$48 is the hourly rate for the employee

• Valerie,

Could you please explain how did you get the projected billing?

• According to AHPP, projected billing is found by multiplying the Hourly Billing Rate x (2080 hrs/year x utilization rate)

• When I plug the numbers in to the aforementioned formula, I get different answers. Yes, Valerie, please explain how you got the projected billing.

• 2080 x 0.75 = 1560hr

1560 x 105 = 163,800

• Sandra's hourly rate: \$32.75

Net multiplier: 3.2 (a constant number)

32.75 x 3.2 = \$104.80 (billing rate)

\$104.80 x 2,080 x 0.75 = \$163,488

\$105.00 x 2,080 x 0.75 = \$163,800

\$163,800 - \$163,488 = \$312.00

There's \$312.00 difference because Hyperfine used different net multiplier number for Sandra's calculations (not a constant of 3.2).

Net multiplier for Sandra:

105.00 / 32.75 = 3.2061068702

0.20 x 2,080 x 0.75 = \$312.00

• Thank you Valerie! This was so helpful.