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!
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