Answer the Following Questions Using the Information Below

question 125

Multiple Choice

Answer the following questions using the information below:
Knowledge Transfer Associates is in the process of evaluating its new client services for the business systems consulting division.
• Server Planning, a new service, incurred $250,000 in development costs.
• The direct costs of providing the service, which is all labor, averages $50 per hour.
• Other costs for this service are estimated at $300,000 per year.
• The current program for server planning is expected to last for two years. At that time, expected new operating systems are likely to make the service non viable.
• Customer service expenses average $250 per client, with each job lasting an average of 40 hours. The current staff expects to bill 15,000 hours for each of the two years the program is in effect. Billing averages $90 per hour.
-What are the estimated life-cycle revenues?

• A) $2,700,000
• B) $3,000,000
• C) $3,400,000
• D) $1,350,000

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Definitions:

Internal Consultants

Employees or departments within an organization that provide expert advice and services to other parts of the same organization, akin to external consultants but focused on internal needs and challenges.

Non-Comparative

A method or approach that does not involve comparing elements or items with one another.

Rating Scale Method

A method of performance evaluation where employees are ranked on a scale based on certain criteria.

Forced Distribution

A performance management system where employee evaluations are distributed along a predetermined curve, often requiring managers to rank employees against each other.