Question

Q30 An engineering firm uses senior engineers, junior engineers, computing services, and assistants on its projects. The billing rate to the customer for these categories is given in the table below together with the hours used on a recent design project. [5 Marks]

Category Senior Engineers Junior Engineers Computing Services Assistants Billing rate ($/hour) 85.00 45.00 35.00 22.00 Project hours 3,000 37,000 19,000 9,500

(a) If this data was used for quoting on future projects, what would be the correct average billing rate used to price a project?

(b) If the estimate for performing a future job were 110,000 hours, what would be the billing amount to the customer?

(c) What would be the billing rate if the straight arithmetic average were used?

DO NOT WRITE THE ANSWERS - USE WORD FORMAT

Answer 1

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a.

Categories	Symbol	Hrs used - n	Symbol	Bill rate ($/Hr) - Xbar	Total amount = (n*Xbar)
Senior engg	n1	3000	X1 bar	85	255000
Junior engg	n2	37000	X2 bar	45	1665000
Computer services	n3	19000	X3 bar	35	665000
Assistants	n4	9500	X4 bar	22	209000
		68500			2794000
				Average billing rate	40.79	$/Hr

Average billing rate is = ((n1 * X1 bar) + (n2 *X2 bar) + (n3 * X3 bar) + (n4 * X4 bar))/(n1 + n2 + n3 + n4).

X double bar = 40.79 $/Hr is average billing rate.

b.

Here n = 110000 hrs & calculated average billing rate = 40.79. $/Hr

Therefore Billing amount is given by = ( X double bar * n ) = ( 40.79 * 110000 ) =  4486715.33 $.

c.

If straight arithmetic were used

X double bar would be = ( 85 + 45 + 35 + 22 ) / 4 = 187/4 = 46.75 $/Hr