Given

Northwood offered- $75000

Estimated bill during normal practices by Primus to Northwood

Classification Hours Rate Amount

Partner 90 $260 $23400
Senior Consultant 125 $160 $20000
Staff Consultant 160 $90 $14400
Travel Costs $21000
Overhead Costs 285 $30 $8550
Total $87350

Analysis in $
Incremental Revenue 70000
Less- Incremental Costs
Travel Costs 21000
Overhead Costs (Variable) 1710
Incremental Profit 47290

Recommendation- If the Primus accept the Northwood's offer then it would earn a incremental pr
If the Primus accept the job then strategically they can increase their bu
 Estimated annual overhead cost- $2400000
Estimated nonpartner hours-80000
Therefore, Estimated annual overhead cost per nonpartner hour- $30
Variable cost- $308*20%= $6
Fixed cost- $14

Wage of employees
Hours Rate Amount
Partner 1000 $250 250000 2400000
Senior Consultant 1000 $150 150000 480000
Staff Consultant 1000 $80 80000

This shows that the Pimus has excess employee capacity

Fixed Costs is irrelevant to VC

would earn a incremental profit of $47290.

they can increase their business presence in the market and the reverse will be if existing clients get to kno
er hour- $30

Total Cost
VC

sting clients get to know that Primus is chrging low to Northwood for their one of the study project.
udy project.