@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.
@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.
Woo! I took a hiatus as an instructor and am just now seeing this question. It’s a good one-- apologies it’s been so long for a reply.
If there’s a discrepancy on a question, please feel free to send me a direct message, since quiz question material can’t be shown in the forums. Always happy to help (now that I’m back)!