What is the necessary billing efficiency

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Reference no: EM13765125

A small consulting engineering company bought an office building for $910,000. The company has eleven engineers and eight support staff. Monthly expenses for for salaries, utilities, grounds maintenance, etc., are $108,000. Use an average billing rate per engineer of $85 per hour and an interest rate of 0.8% per month. Assume the building will have a market value of $1.2 million after 12 years.

(a)How many billable hours must each engineer generate per month to generate a profit of $16,000 per month?

______ billable hours per month per engineer

(b)Assume each engineer works 2000 hours per year. What is the necessary billing efficiency (utilization rate) to achieve this profit level?

_________%

Reference no: EM13765125

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