Question 9 on the PjM Changes in Cost (exercise A) is misleading, and I am not sure it is stated correctly. It asks to base the costs on “recorded hours and direct rates” yet the answer takes the multiplier into the equations. I understand the multiplier should typically be added however the question specifically calls out direct rates. Additionally, the incorrect answer confirms that this is the direct rates.
Please clarify how I am to understand the “direct rates”.
@dmroze Thanks for your question! The direct rates refer to each employee’s hourly salary rate before applying the net multiplier. While the question asks you to use the recorded hours and direct rates, the key is that it’s asking for the amount billed to the client, rather than the direct labor cost. This indicates that you need to apply the net multiplier to determine each employee’s billing rate, then multiply by their recorded hours to calculate the total billed amount. Hope this helps!
Also, just a heads up that we will be removing the screenshot in your post, as we do not allow our paid content to be shared.
Best,
Kiara Galicinao, AIA, NCARB
Product Coordinator Black Spectacles
The question states “based on recorded hours and direct rates”. It should ask “based on billing rates” if it seeks an amount based on billable rates. I view the first part of the question as the intructional. This is deliberately misleading because Black Spectacles can change the answer and easily claim that the current correct answer is wrong since it’s asking for direct rates.
@dmroze I understand your point! To clarify, “based on recorded hours and direct rates” refers to the information you’re using to calculate the answer, rather than the rates you should use for the final amount. The key is that the question asks how much will be billed to the client, which requires applying the net multiplier to the direct rates to determine the billing rates. If the question were asking for the direct labor cost instead, the multiplier would not be applied.
We design our practice questions to reflect the style and complexity of the ARE, where you may encounter tricky wording that requires careful interpretation. I know it can be frustrating, but recognizing what a question is ultimately asking is valuable practice for the actual exam!