PCM Equations Flashcards Preview

ARE 5.0 Mix 2020 > PCM Equations > Flashcards

Flashcards in PCM Equations Deck (11)
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1
Q

Utilization Rate
AKA
Chargeable Ratio

A

total direct labor hours / total labor hours

OR

billed hours / total hours worked

2
Q

Overhead Rate

A

total indirect expense / total direct labor cost
(includes indirect labor)

OR

total overhead costs / direct labor cost
(office expense + indirect labor)

3
Q

Direct Labor Cost

A

employee salary x utilization rate

4
Q

Indirect Labor Cost

A

employee salary x inverse of utilization rate

OR

employee salary - direct labor

5
Q

Net Service Revenue

A

Gross Fee - Consultant Fee

GF- $450
CF-$100

450-100= 350
NSR = $350
6
Q

Profit

A

Net Service Revenue - Direct Expense - Overhead

7
Q

Break Even Multiplier

A

(Direct Labor + Overhead) / Direct Labor

OH-$220
DL-100

(100+220) / 100
320/100 = 3.2
Break Even Multiplier is 3.2

8
Q

Overhead Multiplier

A

Overhead / Direct Labor

OH-$220
DL-$100

220/100 = 2.2
Overhead Multiplier is 2.2

9
Q

Effective Multiplier

A

Net Service Revenue / Direct Labor

NSR-$350
DL-$100

350 /100 = 3.5
Effective Multiplier 3.5

OR

total revenue / direct labor cost
(DLC x 3)

10
Q

Revenue Factor

A

one of the best measurements of a firm’s productivity, is calculated by multiplying the direct labor multiplier from a firm’s achieved hourly rates by the utilization rate based on payroll dollars

11
Q

Return on Overhead

A

Using ROO (return on overhead) can provide a measurement of accountability for an office. Return on overhead is calculated by dividing the profits contributed by a branch office by the amount of overhead expense incurred at that office.