You are trying to estimate the annual cost of setting up a branch of an engineering consulting business in Vancouver, based on your experience of running the original business in Halifax. The original business employs 80 engineers, whereas the Vancouver branch will initially employ 15. On the other hand, Vancouver salaries are typically 50% higher than those paid in Halifax. If the annual salary bill for the Halifax office is $9 000 000, give an order of magnitude estimate for the salary bill of the Vancouver office.

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Quizplus · Accepted Answer

The salary bill for the Vancouver office can be estimated by first determining the salary per engineer in Halifax, then adjusting for the number of engineers and the salary difference in Vancouver. In Halifax, the total salary bill is $9,000,000 for 80 engineers, which is $112,500 per engineer. In Vancouver, with a 50% higher salary, this becomes $112,500 * 1.5 = $168,750 per engineer. For 15 engineers, the total is $168,750 * 15 = $2,531,250, which rounds to the order of magnitude estimate of $2,530,000.

You Are Trying to Estimate the Annual Cost of Setting