PJM  NCARB Practice Exam —question worded incorrectly?
The following question (and correlating correct response) on the new NCARB PJM practice exam seems to be incorrect:
Instead of billing rate, it appears the phrase in the question should be rough labor cost per hr. The billable rate divided by net multiplier would result in the direct salary expense per hr. So, I’m confused why you would multiply the billable rate by the net multiplier.
I would also argue that the wording of the question is misleading as it asks for the added cost, which in my mind means the added rough labor cost to the firm, not an added cost to the client. I would assume the contracted amount for the phase is a stipulated sum not an hourly rate since it says “total DD phase compensation of $152,500”.
In trying to solve it, I divided the billable rate by the net multiplier to get (what I assumed to be) the direct salary expense per hr, then multiplied that by number of additional hours allocated to phase to get the added “rough labor cost” to the firm.
Can anyone confirm if the question is incorrect, or if I am understanding it incorrectly? Thanks for your help!

Thanks Valerie,
I can accept that they are asking for the owners cost ( but just to clarify this wouldn’t include cost of any construction as this is the Architect’s fees, not the Cost of Work) , but I still don’t understand why the question is asking you to multiply the billing rate by the net multiplier to get total cost increase. This has to be an error as the formula to calculate billable rate is direct salary expense x the net multiplier.

Billable rate = amount we charge the customer. Billable rate = 50.00 (given).
Net multiplier of 3.05 means the firm needs $3.05 of net revenue for each $1.00 of direct labor spent on project to cover project labor, overhead and profit. Net multiplier = 3.05 (given).
Additional hours = 240 (given).
Additional project cost to owner = Billable rate X Number of additional hours = 50.00 × 240 = 12,000.
In NCARB example Hourly rate = 50.00 / 3.05 (and not 50.00 as shown in NCARB calculation). 36,600 answer is wrong. 
i think you might be overthinking it. if they give one multiplier, i just use that, you don't really have to wonder "is that the right multiplier?" if multiple multipliers were given, for example a breakeven vs a billable multiplier, then u can spend more time thinking about it. Makes my life much easier.
Also, sometimes when you spend a lot of time using one study material, you get used to their vocabulary on some of these things. So when u read NCARB questions it sounds foreign. I struggle with that too. Which is why I'm really glad NCARB now have their own Practice exams.

Erin,
i agree with you, and I came up with the same answer you did. The multiplier of 3.05 means their average staffer that they are billing out is getting paid $50/3.05 = $16.39/hr.
I don’t see how you could lose more money than what you would’ve been able to bill out for the hours. Someone made a mistake.
Hope this helps!
Rebekka O'Melia, Registered Architect, NCARB, B. Arch, M. Ed, Step UP, Step UP ARE 5.0 Courses
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