Facts:

The W Company Civil Engineers consists of two divisions. The divisions are Water and Waste Water. The company sells engineering services to various customers. The following are the bill rates for the various staff classifications:

Vice President $200/hour

Senior Engineer $180/hour

Staff Engineer $150/hour.

The two divisions expect to bill the following hours:

Water- 10000 hours, vice president at 10% of the time, 30% of Senior Engineer time and remaining to Staff Engineers.

Waste Water- 6000 hours, vice president at 20% of the time, 20% of Senior Engineer time and remaining to Staff Engineers.

The Direct Labor costs per hours are as follows:

Vice President $80/hour

Senior Engineer $60/hour

Staff Engineer $40/hour.

The utilization for each staff members are as follows:

Vice President 60%

Senior Engineer 80%

Staff Engineer 90%.

The company has the following other costs:

Admin Salaries $90,000

Rent $100,000

Utilities $6,000

Benefits $76,000

Assume 20% of time for each staff member includes vacation and sick time. 2080 is the annual total work hours.

Project Part II:

(1). Static budget for the company.

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

VP-50%

Senior-82%

Staff-93%

Based on the above utilization, what is the flexible budget and calculate the Level 2/3 variances.

(3). What recommendations can be made for the upcoming year in budgeting to the CFO for additional profitability and increasing revenue?

(4). What approaches would your recommend to increase the company overall utilization of staff and billable hours?

(5). How will your recommendations impact customer profitability or divisional profitability?

(6). The company wants to add a new division. It will be the Construction Division with 3 people. Please discuss pros and cons of adding a division and when you might consider not to add the division.

UNIVERISTY OF CALIFORNIA DAVIS ARE 119 GROUP ASSIGNMENT PART II Instructions: Please form groups of 7 (7 maximum and 5 minimum) people for this assignment. The groups can be selected randomly. It is the student's responsibility to find a group. Each group needs to complete the assignment below. Additionally, each group is required to include a page with each member's contribution to the assignment. If a group member has no contributions, that student will get zero for the assignment. The objective of a group assignment is to get accustomed to working in teams. Lastly, each group is responsible for a 5-minute presentation to the prescribed audience. Grade is 70% to the written report and 30% to the appropriate high level presentation on the due date. Facts: The W Company Civil Engineers consists of two divisions. The divisions are Water and Waste Water. The company sells engineering services to various customers. The following are the bill rates for the various staff classifications: Vice President $200/hour Senior Engineer $180/hour Staff Engineer $150/hour. The two divisions expect to bill the following hours: Water- 10000 hours, vice president at 10% of the time, 30% of Senior Engineer time and remaining to Staff Engineers. Waste Water- 6000 hours, vice president at 20% of the time, 20% of Senior Engineer time and remaining to Staff Engineers. The Direct Labor costs per hours are as follows: Vice President $80/hour Senior Engineer $60/hour Staff Engineer $40/hour. The utilization for each staff members are as follows: Vice President 60% Senior Engineer 80% Staff Engineer 90%. The company has the following other costs: Admin Salaries $90,000 Rent $100,000 Utilities $6,000 Benefits $76,000 Assume 20% of time for each staff member includes vacation and sick time. 2080 is the annual total work hours. Project Part II: (1). Prepare a static budget for the company. (2). Assume that the actual utilization came in at the following rates: VP-50% Senior-82% Staff-93% Based on the above utilization, prepare a flexible budget and calculate the Level 2/3 variances. (3). What recommendations can be made for the upcoming year in budgeting to the CFO for additional profitability and increasing revenue? (4). What approaches would your recommend to increase the company overall utilization of staff and billable hours? (5). How will your recommendations impact customer profitability or divisional profitability? (6). The company wants to add a new division. It will be the Construction Division with 3 people. Please discuss pros and cons of adding a division and when you might consider not to add the division