Calculating Billable Rate

So, I got this question Wrong on the Practise Exam:

After looking at the reasoning I was able to understand the steps and how the solution was reached.
BUT, in the AHPP I found this chart

And when I tried using the same reasoning I could not come up with the number $359.25 instead I got $383.33

Can someone please help me understand what is going on here?
Thank you in advance!

1 Like

Hi @nickvspano !

Thanks for your question. The Black Spectacles reasoning is how you’re supposed to calculate billable rate for an employee when given their hourly pay, overhead rate, and profit percentage. The example from AHPP looks like it’s factoring indirect expenses into the rate which is a different way of calculating. As far as I can tell, the AHPP example isn’t giving you the overhead rate they’re just having you add in the indirect expenses.

Check out 7.2 page 415 in the AHPP (15th Edition). There’s a great example there that gives you the same information that the Black Spectacles practice question gives and uses the same reasoning to find the answer. Hope this helps!


1 Like