On the mixed-use project where the total lump-sum design fee is $1,080,000 and CSME engineers' fee is 35% of the total fee, what is XYZ Partners' fee?

On the mixed-use project where the total lump-sum design fee is $1,080,000 and CSME engineers' fee is 35% of the total fee, what is XYZ Partners' fee?

• A. $702,000
• B. $216,000
• C. $486,000
• D. $378,000

Answer: (C)

When a lump-sum design fee is shared and one party’s portion is defined as a percentage of the total, you first assign that percentage to the specified party and then allocate the remainder to the other party. Here, the total lump-sum design fee is 1,080,000 and the engineers’ fee is 35% of the total. So the engineers’ fee is 0.35 × 1,080,000 = 378,000. The remaining amount for XYZ Partners is 1,080,000 − 378,000 = 702,000. Therefore, XYZ Partners’ fee is 702,000.

When a lump-sum design fee is shared and one party’s portion is defined as a percentage of the total, you first assign that percentage to the specified party and then allocate the remainder to the other party. Here, the total lump-sum design fee is 1,080,000 and the engineers’ fee is 35% of the total. So the engineers’ fee is 0.35 × 1,080,000 = 378,000. The remaining amount for XYZ Partners is 1,080,000 − 378,000 = 702,000. Therefore, XYZ Partners’ fee is 702,000.