Financial Planning Model. Hool Contract Engineering would like to develop a financial planning model to aid in its monthly and annual financial planning. Bob Johannes, accountant, has identified the following relationships among the key planning variables for 1998:

1. Revenues are constrained by the number of skilled computer-aided design (CAD) engineers employed by Hool. Each engineer works 2,000 hours per year and has a billing time ratio of 75 percent. All available billable time is utilized. Salaries, billing rates, and headcounts by skill levels are:

2. Customers are billed during the first week of the next month for engineering time. About 75 percent of the customers pay by the end of the billing month.
The remainder pays during the following month.
3. Equipment and software lease costs are forecast to-be $1,890,000 annually but are paid monthly.
4. Other annual administrative expenses include cash expenses of $500,000 plus $10,000 per employee and 10 percent of total salaries. Per employee costs are paid one month in advance (i.e., health insurance). The percentage of salaries expenses (i.e., payroll taxes) is paid in the month following the payroll expense.
5. Income taxes are 40 percent.
Required:
Using symbols similar to those shown in the Problem for Review in this chapter, prepare a series of equations that can represent the following relationships:
Engineering revenue for the current month.
Costs of engineers for the current month.
Total payroll for the current month.
Cash inflow from customers for the current month (dollars).
Cash outflow for all nonpayroll administrative expenses for the current month.
Net income before taxes for the current month.
Income taxes for the current month.
VgP>iOo e?e Ending cash account balance for the current month.
Use subscripts of , for the current month, ,_, for last month, , , , for next month, and yes for two months after the current month.

Salary Billing Rate Number Employed Professional grade 1 $90,000 $120 per hour 20 Professional grade 2 60,000 90 per hour 30 General design engineer 45,000 80 per hour 15 Administration 70,000 10