A Client in Another Province Needs Immediate Help in Solving

question 49

Essay

A client in another province needs immediate help in solving a personnel training problem in the shipping department. Classify each activity on the basis of its relationship with this consulting engagement. Items may have multiple classifications. Use the following headings:
a. Four employees will have to spend three nights in Quebec City, the hotel bill has been negotiated in advance for $1,800.
b. All staff members receive $1,000 per diem for travel.
c. Current year's amortization of the firm's computer system is $15,000.
d. Round-trip transportation for each staff member is $500.
e. The firm is also sending the same four staff members to Toronto, for a two week engagement upon their return from this trip. The firm's cost of this trip will be $10,000.
f. The firm has a $2,000 maintenance contract on its telecommunication system for the current year.
g. If the firm accepts this job, it will have to decline a job in Vancouver that has the potential of providing a net cash inflow of $5,000 after all expenses.
h. The firm's variable overhead is $50 per client hour.
i. The firm will pay $60 next month for this year's membership in the Canadian Consultants Society for each professional staff member.
j. Last year the firm paid $4,000 to make improvements in its 5-year leasehold on its offices.

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Definitions:

Above Average P/E Multiple

A valuation metric indicating that a company's current share price is higher relative to its per-share earnings than the industry or overall market average.

Risk-adjusted Equity Cost

A method of determining the cost of equity capital that incorporates the risk associated with the equity investment.

Price Earnings Ratio

A valuation metric that compares a company's share price to its per-share earnings, used to evaluate if a stock is over or under-valued.

Risk-adjusted Cost

A financial measure that adjusts the costs of an investment by considering the risk involved, accounting for the riskier nature of some investments compared to others.