Entrepreneurship and Small Business Management

Professional Services

You are planning to hire professional consultants to advise your business on particular problems. Consultants may charge a flat fee, a percent of the cost of the project, or by the hour.

1.		Applebury Wholesale Grocers, Inc. plans to expand its use of computers to include billing, payroll, and inventory control. The company plans to construct a new building at a cost of $895,000 to house the new computer installation. Applebury first hires an architect, who charges 7% of the total cost of the building. How much does Applebury need to pay the architect?
			A)	$70,000
			B)	$62,650
			C)	$73,425
			D)	$174,230
2.		In problem 1, Applebury also hires a computer programmer that charges $42 per hour and works 150 hours. What is the cost of the programmer's services?
			A)	$6300
			B)	$4200
			C)	$5700
			D)	$5600
3.		In problems 1 and 2, Applebury also needs to hire a system analyst, who charges a flat fee of $5500. What is the total that Applebury pays for the professional services it uses to plan its new building?
			A)	$11,800
			B)	$68,150
			C)	$71,750
			D)	$74,450
4.		A lawyer charges a starting business $73 per hour for some legal consultations. The lawyer works for 18 hours on the project. What is the total charge for the lawyer's services?
			A)	$7300
			B)	$2140
			C)	$662
			D)	$1314
5.		A productivity consultant charges A&G Manufacturing Co. a $5000 flat fee and works 25 hours. How much does the consultant earn per hour working for A&G?
			A)	$200
			B)	$450
			C)	$45
			D)	$120
6.		A planning specialist charges 5%; of the total project cost. The project totaled $600,000. How much is the planning specialist paid?
			A)	$16,000
			B)	$32,000
			C)	$30,000
			D)	$43,000
7.		A real estate broker is paid 4.25%; of the total sale. A house sells for $220,000. What is the real estate broker paid?
			A)	$42,500
			B)	$9350
			C)	$4250
			D)	$6730
8.		Houston Engineering contracts with a technical writer to produce an instruction manual. The writer charges $27 per hour, and the project takes 38 hours. What does Houston Engineering pay the writer?
			A)	$6500
			B)	$1282
			C)	$2121
			D)	$1026
9.		In problem 8, Houston Engineering takes the manual to a print shop to be produced. The print shop charges $6.50 per manual. How much will it cost if Houston Engineering has 130 manuals made?
			A)	$845
			B)	$780
			C)	$1280
			D)	$136
10.		In problems 8 and 9, what is the total amount Houston Engineering pays to other professionals to create the instruction manual?
			A)	$1260
			B)	$1592
			C)	$1871
			D)	$1521
11.		The Meeker Company hired a staff development specialist to conduct a 2-day workshop for 54 of its employees. The specialist was paid $72 per person, per day. What was the total cost for the specialist's services?
			A)	$3888
			B)	$7776
			C)	$1440
			D)	$8010
12.		The Farmers Co-Op plans to issue $15,000,000 in bonds to pay for an extensive expansion. One bond broker will sell the bonds for a fee of 3.25%; of the $15,000,000 face value of the bonds. What will the broker's services cost the Co-Op?
			A)	$325,000
			B)	$487,500
			C)	$456,700
			D)	$315,900
13.		Central Bank and Trust plans to build a new branch office. Central hired Marcie Baker, an architectural consultant. Marcie's fee is 7.5%; of the cost of the project. The cost of the branch office is estimated to be $4,500,000. What amount should Central plan to pay Marcie for her services?
			A)	$337,500
			B)	$525,000
			C)	$350,000
			D)	$410,200
14.		In problem 13, Central Bank and Trust also needs to hire a project engineer for the new branch. They hire Sam Gonzales, whose fee is 4% of the cost of the project. How much should Central plan on paying Sam?
			A)	$35,000
			B)	$220,000
			C)	$120,000
			D)	$180,000
15.		In problem 13, Central also hires Marco Fonteno to take care of the legal aspects of the project. Marco charges $80 per hour, and it takes him 9.5 hours to complete the paperwork. What is the total charge for Marco's work?
			A)	$720
			B)	$750
			C)	$760
			D)	$780
16.		What amount should Central Bank and Trust plan to pay for the 3 professional services in problems 13-15?
			A)	$454,560
			B)	$560,560
			C)	$518,260
			D)	$515,000
17.		Superfast Service Station has installed automated checkout equipment in its 6 stations. It hired Margot Meyers to consult on its installation. Meyers charged 7%; of the installation cost, which totaled $72,970. What is the total cost of Margot Meyers' consultation?
			A)	$5290
			B)	$5107.90
			C)	$5523.19
			D)	$5100
18.		In problem 17, Superfast also hires Richard Reddle to instruct its employees on the use of the equipment. Richard conducted six 4-hour sessions at $135 per session. How much does Superfast need to pay Richard Reddle?
			A)	$810
			B)	$540
			C)	$726
			D)	$670
19.		What is the total amount Superfast Service Station pays for the professional services it uses in problems 17 and 18?
			A)	$6333.19
			B)	$6100
			C)	$5770
			D)	$5917.90
20.		After Superfast Service Station installs the new checkout equipment, they hire a service technician to come inspect, clean, and tune the equipment. The technician comes once every 6 months to each service station. The technician charges a flat fee of $82 per service visit per station. How much does Superfast pay for the service visits for all of its stations in one year?
			A)	$872
			B)	$929
			C)	$165
			D)	$984