Credit Control - Practice Assessment 2

Liam5762

I'm not sure how they got this answer

BCG is a consultancy firm providing management support to HLPM. BCG normally charges £500 per day for consultancy support. A contract with HLPM was signed and started on 1 January 20X1 for a period of 4 months and a planned total of 50 days support. The agreed rate was £400 per day subject to a minimum of 40 days support. HLPM decides how many days will be worked in the month.

A total of 25 days support was provided between 1 January and 31 March. The invoiced amount to date is £10,000. During April BCG provided 13 days support.

How much should BCG invoice HMPM in April 20X1?

The answer is BCG should charge £6000 in April

Anyone know why they charge this amount?

cooldog

They have a minimum contract of 40 days over 4 months, for the first 3 months they worked 25 days, in April they only worked 13 days, as the contract for a minimum of 40 days, they were charged for 15 days in April (15 day plus 25 days for the 3 months to March = 40 days)

£400 a day x 15 days = £6,000