@coachhayleypugh

Which is correct:

Net multiplier = breakeven rate / the inverse of target profit

or

Net multiplier = breakeven rate / the inverse of profit multiplier

Both are not correct because my answers aren’t the same.

Appreciate your help!

or is it:

Net multiplier = breakeven rate + profit multiplier

@coachhayleypugh @ngolban practice-quiz practice management

I also have a question on net multiplier. One question on the PCM Quiz Break 6 asks to find the billing rate for an employee. To do this you have to find the Net Multiplier.

The correct answer is found with NM = Breakeven rate + Profit Multiplier. Using this formula the NM = 2.85 and the correct answer to the question is shown to be $120.89

However in the AHPP on page 410 it says the Net Multiplier = ratio of Net Operating Revenue to Total Direct Labor. If Net Multiplier is found this way the NM = 2.27 and the answer to the question would be $96.29, which is said to be incorrect.

I don’t understand why calculating the NM according to the AHPP formula returns an incorrect answer. What am I missing? Thanks for any clarification.

1 Like

@coachhayleypugh

@coachchrishopstock

@coachkatebarbaria

or anyone else…

Could you please help us out?

Thank you!

Same question as you had here. I bet the Quiz question is wrong since NM = direct labor + overhead rate + profit rate = NOR / total direct labor, the rate in the question is not matching.