ARE PCM Financial Equations Test with all Correct & 100%
Verified Answers |Guaranteed to Pass
Overhead Rate Formula ✔Correct Answer-Total Overhead Cost / Total Direct Labor Cost
Overhead Rate Range ✔Correct Answer-Target rate of 1.3-1.5
Overhead Rate Use ✔Correct Answer-*Cost of operations not directly related to projects
*Includes costs for indirect labor & expenses (ex. taxes, rent, utilities)
*Ex. For every $1 spent on salary, firm spends $1.30 on overhead
Break Even Rate Formula ✔Correct Answer-Total Operations Cost / Total Direct Labor Cost
Break Even Rate Range ✔Correct Answer-Target rate of 2.3-2.5
Break Even Rate Use ✔Correct Answer-*Hourly rate (salary) x break-even rate determines
minimum hourly fee firm must charge a client to break even on the cost of the employee
*Accounts for salary of employee plus overhead expenses (including benefits) attributed to
employee
*Does not include profit
*Ex. For every $1 spent on salary, firm must recapture $2.30 to break even
Net Multiplier Formula ✔Correct Answer-Net (Operating) Revenue / Cost of Direct Labor
OR
Break Even Rate / Inverse of Target Net Profit %
Net Multiplier Range ✔Correct Answer-Target rate of 2.7-3.0
Net Multiplier Use ✔Correct Answer-*Used to calculate billing rate of an employee (hourly
rate x multiplier)
*Includes costs for salary, benefits, overhead, expenses, and profit
*Inverse = .69 for a 31% profit target
*Ex. For every $1 spent on salary, firm charges client $2.70
Net (Operating) Revenue Formula ✔Correct Answer-Total revenue - consultants fees -
reimbursables - project-related expenses
Total Overhead Formula ✔Correct Answer-Indirect labor + overhead expenses (ex. taxes, rent,
utilities)
Current Ratio Formula ✔Correct Answer-Total (current) assets / Total (current) liabilities
Verified Answers |Guaranteed to Pass
Overhead Rate Formula ✔Correct Answer-Total Overhead Cost / Total Direct Labor Cost
Overhead Rate Range ✔Correct Answer-Target rate of 1.3-1.5
Overhead Rate Use ✔Correct Answer-*Cost of operations not directly related to projects
*Includes costs for indirect labor & expenses (ex. taxes, rent, utilities)
*Ex. For every $1 spent on salary, firm spends $1.30 on overhead
Break Even Rate Formula ✔Correct Answer-Total Operations Cost / Total Direct Labor Cost
Break Even Rate Range ✔Correct Answer-Target rate of 2.3-2.5
Break Even Rate Use ✔Correct Answer-*Hourly rate (salary) x break-even rate determines
minimum hourly fee firm must charge a client to break even on the cost of the employee
*Accounts for salary of employee plus overhead expenses (including benefits) attributed to
employee
*Does not include profit
*Ex. For every $1 spent on salary, firm must recapture $2.30 to break even
Net Multiplier Formula ✔Correct Answer-Net (Operating) Revenue / Cost of Direct Labor
OR
Break Even Rate / Inverse of Target Net Profit %
Net Multiplier Range ✔Correct Answer-Target rate of 2.7-3.0
Net Multiplier Use ✔Correct Answer-*Used to calculate billing rate of an employee (hourly
rate x multiplier)
*Includes costs for salary, benefits, overhead, expenses, and profit
*Inverse = .69 for a 31% profit target
*Ex. For every $1 spent on salary, firm charges client $2.70
Net (Operating) Revenue Formula ✔Correct Answer-Total revenue - consultants fees -
reimbursables - project-related expenses
Total Overhead Formula ✔Correct Answer-Indirect labor + overhead expenses (ex. taxes, rent,
utilities)
Current Ratio Formula ✔Correct Answer-Total (current) assets / Total (current) liabilities
