Projected Billing question

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    Valerie Galchenko

    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

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    Christopher Boucher

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

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    Valerie Galchenko (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. 

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    Christopher Boucher

    Thanks, Valerie!

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    Christopher Boucher

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

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    Christopher Boucher

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

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    David Gaied

    Valerie,

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

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    Christopher Boucher

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

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    Christopher Boucher

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

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    David Gaied

    2080 x 0.75 = 1560hr

    1560 x 105 = 163,800 

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    Valerie Galchenko

    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 

     

     

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    KH

    Thank you Valerie! This was so helpful.

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