Scenario:

+ Your company has been losing a lot of proposals in the last 4 months

+ The office currently has enough work but will run out of work in 6 months if you don't win a few

good sized contracts in the next 3-4 months.

+ As a result of the lost proposals Maria, the office manager has assigned Harry

additional marketing and proposal coordinating duties to assist her in capturing new business

+ At the current utilization and fee rates the company is barely showing minimal profits as shown

($176k earnings before taxes, Gross Profit

+ Maria estimates that Harry's utilization will reduce to 40%

+ Maria has asked everyone in the office to pitch in to make ends meet until things turn around

+ Project Engineers can't afford to reduce their client marketing efforts under the circumstances but believe they can get their utilization up to 85%

+ The question remaining is how much more work will the staff engineers & CAD operator have to do

to keep the company at the break even point

Your task:

+ Change Harry's availability to 40% and the Project Engineer's to 85%

+ Adjust the availability for the Staff Engineers and CAD Operator until you achieve Gross Profit before taxes of at least 12.0%. The availability (utilization) for each title classification should be the same for the entire

classification (i.e., you would not have diffierent utilization rates for each person listed as a Staff Engineer).

+ Record the availability of the Staff Engineers and CAD Operator needed to get to a minimum 12% Gross Profit

Use the following information for calculations:

Harry Yousef Staff Engineer Staff Engineer Gaspar Staff Engineer Labor Costs Annual Hrly Total Utilizatio Direct Indirect Hourly Labor Name Title Salary ($) Salary Hours n Hours Hours Direct Indirect Rate Multiplier Gross Rev Maria Principal $175,000 84 2.080 30% 624 1,456 $52,500 $122,500 205 2.44 127.920 Project Manager $145,000 70 2,080 75% 560 520 $ 108,750 $36,250 185 2.65 288,600 Project Engineer $108,000 52 2.080 32 80% 1,664 10 416 $86,400 $21,600 165 3.18 274,560 Nicole Project Engineer Nicole $98,000 47 2.080 80% 1.664 416 165 $78,400 $19,600 002 8.50 274.560 710 David Project Engineer $94.000 45 080 80% 1.664 416 $75,200 $18,800 165 8.65 274.560 Jonathon Staff Engineer $78,000 38 08 0060 08 080 and 100 . 10.000 88% .830 250 $68,640 $9.360 125 33 000 Sandy 228,800 08 $71.000 34 000 2,080 122 ,830 88% 24 Par $8.520 04 250 $62,480 125 66 Rebecca Staff Engineer 228.800 08 $67.000 32 Toto ngreer 080 24 830 88% 0.00 250 $58,960 OV $8,0401 125 8.88 Jennifer 08 228.800 $64,000 31 ven 080 . 88% 830 16- 250 $56.320 $7.680 125 00% 004 06 OM Kit $60.000 228,800 2,080 29 26 sed 88% 1.830 122 250 $52.800 $7.200 33 08:00 125 Fran 00% 228,800 CAD Operator $50,000 24 2,080 88% 1,830 250 $44.000 $6,000 100 4.16 183.040 Admin Asst $45.000 22 2.080 25% 520 1,560 $11.250 $33,750 60 2.77 31.200 Pat Executive Assistar $60,000 29 2,080 25% 520 1,560 $15,000 $45,000 60 2.08 31,200 Beth Accountant $80,000 38 2.080 0% 0 2.080 1,200 $0 $80,000 60 1.56 $1,195,000 29,120 19,198 9,922 $770,700 $424,300 Total Labor Revenue 2,629,640 Other Revenue 60.000 Exercise 2 Scenario Total Gross Revenue 2,689,640 + Your company has been losing a lot of proposals in the last 4 months + The office currently has enough work but will run out of work in 6 months if you don't win a few good sized contracts in the next 3-4 months Direct Expenses + As a result of the lost proposals Maria, the office manager has assigned Harry Labor $770,700 additional marketing and proposal coordinating duties to assist her in capturing new business Other $60,000 + At the current utilization and fee rates the company is barely showing minimal profits as shown Subtotal $830,700 ($176k earnings before taxes, Gross Profit