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Questions and Answers

What percentage of the firm's total annual gross salaries does BIM Specialist B's salary represent?

20%

10%

15% (correct)

12%

What is the total bonus amount distributed among the staff members?

$90,000

$70,000

$80,000 (correct)

$60,000

Why should the firm proceed with the hospitality project?

The project demands require additional staff.

The project is for a long-term client and within their usual scale. (correct)

The project is too small for the firm.

The project is outside their area of expertise.

What is the construction budget for the hospitality project?

$20 million Signup and view all the answers

Why might the firm not want to take on the hospitality project?

The staff is already fully committed for the next four months. Signup and view all the answers

What is the annual salary of BIM Specialist B?

$75,000 Signup and view all the answers

How does the firm decide to distribute the bonus amount among the staff members?

Proportionally to the gross salaries of the staff members Signup and view all the answers

What is the total annual gross salaries of the firm's staff?

$500,000 Signup and view all the answers

What is the total cost of the initial expenses to set up the new office?

$18,365 Signup and view all the answers

What is the total revenue generated from the architectural design fees under contract for the office building project?

$85,000 Signup and view all the answers

What is the projected profit or loss for the firm in the first six months?

$4,695 loss Signup and view all the answers

What is the purpose of implementing a fixed work schedule with structured breaks in the firm?

To support organizational health Signup and view all the answers

What is the total cost of employee salaries for 13 pay periods?

$64,545 Signup and view all the answers

What is the cost of insurance for six months?

$4,750 Signup and view all the answers

What is the purpose of establishing a bonus structure in the firm?

To incentivize employees to meet project deadlines Signup and view all the answers

What is the total cost of office rent and software for six months?

$14,100 Signup and view all the answers

What would most improve the architecture firm's financial performance?

Reducing pro bono work Signup and view all the answers

What is the formula to calculate the net multiplier?

Net operating revenue / total direct labor expense Signup and view all the answers

What is the current year's actual net multiplier?

1.76 Signup and view all the answers

What is the difference between the firm's budgeted net multiplier and the actual net multiplier?

0.92 Signup and view all the answers

What is the total direct labor expense for the current year?

287,040 Signup and view all the answers

What is the net operating revenue for the current year?

505,500 Signup and view all the answers

What is the budgeted net multiplier for the current year?

2.68 Signup and view all the answers

What is the purpose of calculating the net multiplier?

To evaluate the firm's financial performance Signup and view all the answers

Study Notes

Calculating Bonus Amounts

An architecture firm distributes a $80,000 fee surplus as bonuses to staff, proportional to their gross salaries.
The bonus amount for BIM Specialist B is calculated as 15% of the total bonus, since their salary is 15% of the firm's total annual gross salaries.
BIM Specialist B's bonus amount is $12,000 (15% of $80,000).

Evaluating a Project

An architecture firm is approached by a long-term client for a hospitality project with a construction budget of $20 million.
The project is within their usual scale, but demands additional staff.
The firm should proceed with the project because it is for a long-term client, within their usual scale, and not within their area of expertise.

Setting Up a New Firm

Two architects start a new firm with projected expenses: computers ($6,300), employee salaries ($4,965 per pay period), insurance ($4,750 for six months), and office rent and software ($2,350 per month).
The firm's financial performance in the first six months will result in a loss of $4,695.

Implementing Socially Responsible Practices

To become a more socially responsible design practice, an architectural firm should implement policies and procedures that support organizational health.

Improving Financial Performance

To improve financial performance, an architecture firm should reduce pro bono work, which exceeds their budget and cannot be supported by their revenue.

Calculating Net Multiplier

The net multiplier is calculated as net operating revenue divided by total direct labor (salary) expense.
The difference between the firm's budgeted net multiplier and actual net multiplier is 0.92.

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