Compute net marginal revenue product

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Reference no: EM1375613

Will Truman and Associates, LLC is a successful Manhattan based law company. Worker productivity at company is examined in billable hours, which vary between partners and associates.

Partner time is billed to clients at a rate of 250 per hour whereas associates time is billed at a rate of 125 per hour. On average each partner generates 25 billable hours per 40 hour work week with fifteen hours spent on promotion, administrative and supervisory responsibilities. Associates generate an average of 35 billable hours per 40 hour workweek and spend five hours per week in administrative and training meetings. Variable overhead costs average 50% of revenues generated by partners and given supervisory requirements, 60% of revenue generates by associates.

[1] Compute the yearly 50 workweek net marginal revenue product of partners and associates.
[2] If partner earn 175000 and associates earn 70,000 per year does the company have an optimal combination of partners and associates? If not why not? make sure answer explicit and support any recommendations for change

Reference no: EM1375613

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