Based on the instructions below, can you tell me whether my answer for the static budget is correct? and if not, what am I missing?

The Seneca Company (Civil Engineers) consists of two divisions. The divisions are Transportation and Infrastructure. The company sells engineering services to various customers. The following are the bill rates for the various staff classifications:

Vice President

$250/hour

Senior Engineer

$200/hour

Associate Engineer

$190/hour

Staff Engineer

$160/hour

The two divisions expect to bill the following hours:

Transportation - 10,000 hours, vice president at 10% of the time, 20% of Senior Engineer time 10% to Associate engineers and remaining to Staff Engineers.

Infrastructure - 6,000 hours, vice president at 12% of the time, 20% of Senior Engineer time, 5% to Associate engineers and remaining to Staff Engineers.

The Direct Labor costs per hours are as follows:

Vice President

$90/hour

Senior Engineer

$70/hour

Associate Engineer

$60/hour

Staff Engineer

$50/hour

The utilization (billable ratio to total hours) for each staff member is as follows:

Vice President

60%

Senior Engineer

80%

Associate Engineer

85%

Staff Engineer

90%

The company has the following other costs:

Admin Salaries

$81,000

Rent

$120,000

Utilities

$16,000

Benefits

$75,000

Assume that there are 2080 hours per year that each engineer can work including vacation and other benefit hours.

You are an outside third party Human Resources consulting firm and the Seneca Company Board of Directors, CFO and the CPO have engaged your company. The goal of the Board, CFO and the CPO is to improve profitability of the divisions and company. Therefore, to accomplish providing engagement advice to the Board, CFO and CPO the consulting team should complete the following questions during the presentation and in the final report.

1.Make a static budget for the company.

2.Assume that the actual utilization came in at the following rates:

Vice President

50%

Senior Engineer

82%

Associate Engineer

88%

Staff Engineer

93%

MY ATTEMPT:

Transportation: $1,800,000 (based on bill rates and hours provided)

Infrastructure: $1,081,800

Direct labour: $428,480 (Direct Labor costs per hour based on utilization rates for each staff member as a % of 2080 hours per person)

Fixed costs $292,000