Construction Accounting And Financial Management (4th Edition)
4th Edition
ISBN: 9780135232873
Author: Steven J. Peterson MBA PE
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 4, Problem 11P
Your company has been hired to act as a construction manager for the construction of a bookstore for a fixed fee of $32,000. When the design was 90% complete, you prepared a budget for the project which is shown in Figure 4-13
During the buyout, the subcontracts shown in Figure 4-14 were signed and the purchase orders shown in Figure 4-15 were issued. No additional costs are expected tor the contracts in Figure 4-14 and the purchase orders in Figure 4-15. A purchase order has been issued for concrete for $116 per cube yard. This price is 4% below the costs used in the budget.
You have a meeting with the project’s owner to discuss the financial status of the project. Using the committed cost worksheet in Figure 4-1 of the textbook, update the estimated cost at completion and determine if the project is over or under budget.
The project in Problem 10 is expected to take 9 months to complete. The costs for the project at the end of the second month are shown in Figure 4-16. You have a meeting with project’s owner to discuss the financial status of the project. Using the committed cost worksheet from Problem 10, update the estimated cost at completion and determine if ne project is over or under budget. The supervision and temporary utility costs should be prorated over the life of the project. The pouring of the footings, foundations, and floor slab are complete.
Figure 4-16 Cost for Problem 10
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Assume that you are one of the owners of Pinoy Corporation. Upon reviewing the project income statements as shown in Tables 7.3 and 7.4 you realized that salaries are understated because it only accounts for the 12 months of salary of each employee and does not include the 13th month pay, which is required by law. You also feel that cost of goods sold ought to be computed at 45% instead of 40% of salles revenues. Using a spreadsheet program, revise the projected income statements for the first year and the first three years of the business.
You are asked to recommend whether a firm should make or purchase product A. The following are data conceming the two options For the purchase option, the firm can buy product A at $19 per unit. For the make option, the firm can produce product A based
on the following cost estimation data. The firm has to pay a weekly rental payment of $19,000 for the production facility With the use of this facility, the firm also has to hire five operators to help make product A Each operator works eight hours per day, five days
per week at the rate of $10 per hour. In other words, the rental and labor expenses are fixed costs. The material cost for the make option is $14 per unit of product A
a. Find a weekly amount of product A that provides the breakeven point for the firm. The breakeven point in this problem indicates the firm's indifference between purchasing or making product A.
b. If the firm estimates the sale of product A to be 5,600 units per week, should it make or purchase product A?
a.…
A Project Manager (PM) wants to price out the cost for her project for the use of a
piece of equipment. The company knows the piece of equipment is used by all
projects combined an average of 31 hours per week. The company the PM works for
actualy rents the piece of equipment from a 3rd party provider at a cost of $32000
per month and spends $19000 per year on maintenance (the 3rd party provider
doesn't pay for it). WWhat would be the ABC cost for the use of the piece of
equipment for the PM's project if the PM needs the equipment for 50 hours? Use 5
significant figures in your calculations.
Your Answer:
Chapter 4 Solutions
Construction Accounting And Financial Management (4th Edition)
Ch. 4 - Define committed costs and provide two examples of...Ch. 4 - Why is labor seldom a committed cost?Ch. 4 - Prob. 3DQCh. 4 - What are overbillings and how do they occur?Ch. 4 - Prob. 5DQCh. 4 - What are the six key principals of internal...Ch. 4 - What should you look for in a construction...Ch. 4 - Prob. 8PCh. 4 - Prob. 9PCh. 4 - Prob. 10P
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Magic Realm, Inc., has developed a new fantasy board game. The company sold 15,000 games last year ata selling price of $20 per game. Fixed costs associated with the game total $182,000 per year, and variablecosts are $6 per game. Production of the game is entrusted to a printing contractor. Variable costs consistmostly of payments to this contractor.Required:1. Prepare a contribution format income statement for the game last year and compute the degree ofoperating leverage.2. Management is confident that the company can sell 18,000 games next year (an increase of 3,000games, or 20%, over last year). Compute:a. The expected percentage increase in net operating income for next year.b. The expected total dollar net operating income for next year. (Do not prepare an income statement;use the degree of operating leverage to compute your answer.)arrow_forwardMagic Realm, Inc., has developed a new fantasy board game. The company sold 15,000 games last year at a selling price of $20 per game. Fixed expenses associated with the game total $182,000 per year, and variable expenses are $6 per game. Production of the game is entrusted to a printing contractor. Variable expenses consist mostly of payments to this contractor.Required:1. Prepare a contribution format income statement for the game last year and compute the degree of operating leverage.2. Management is confident that the company can sell 18,000 games next year (an increase of 3,000 games, or 20%, over last year). Given this assumption:a. What is the expected percentage increase in net operating income for next year?b. What is the expected amount of net operating income for next year? (Do not prepare an income statement; use the degree of operating leverage to compute your answer.)arrow_forwardCaramel Spa Company sells prefabricated pools that cost $80,000 to customers for $144,000. The sales price includes an installation fee, which is valued at $20,000. The fair value of the pool is $128,000. The installation is considered a seperate performance obligation and is expected to take 3 months to complete. The transaction price allocated to the pool and the installation isarrow_forward
- Adams Furniture receives a special order for 10 sofas for a special price of $6,000. The direct materials and direct labor for each sofa are $140. In addition, supervision and other fixed overhead costs average $160 per sofa. a1. What is the impact on operating income from accepting the special order? a2. Based solely on a short-term financial analysis, should Adams accept the special order? b1. If Adams is currently operating at full capacity, what would be the opportunity cost per unit for lost sales to regular customers if the special sales order is accepted and the selling price per unit on regular sales equals $900? b2. Based solely on a short-term financial analysis, should Adams accept the special order if it is currently operating at full capacity? Complete this question by entering your answers in the tabs below. Req A1 Show Transcribed Text Req A1 What is the impact on operating income from accepting the special order? Operating income would per sofa. Yes ONO Reg A2 Req A1…arrow_forwardAmerican Investor Group is opening an office in Portland, Oregon. Fixed monthly costs are office rent ($8,800), depreciation on office furniture ($1,800), utilities ($2,500), special telephone lines ($1,500), a connection with an online brokerage service ($2,400), and the salary of a financial planner ($4,000). Variable costs include payments to the financial planner (9% of revenue), advertising (11% of revenue), supplies and postage (4% of revenue), and usage fees for the telephone lines and computerized brokerage service (6% of revenue). Read the requirements. Requirement 1. Use the contribution margin ratio approach to compute American's breakeven revenue in dollars. If the average trade leads to $750 in revenue for American, how many trades must be made to break even? Begin by showing the formula and then entering the amounts to calculate the required sales dollars for American to break even. (Abbreviation used: CM = contribution margin.) Fixed costs Target profit ) + CM ratio =…arrow_forwardMagic Realm, Incorporated, has developed a new fantasy board game. The company sold 26,400 games last year at a selling price of $64 per game. Fixed expenses associated with the game total $440,000 per year, and varlable expenses are $44 per game. Production of the game is entrusted to a printing contractor. Varlable expenses consist mostly of payments to this contractor. Required: 1-a. Prepare a contribution format Income statement for the game last year. 1-b. Compute the degree of operating leverage. 2. Management is confident that the company can sell 33,792 games next year (an Increase of 7,392 games, or 28%, over last year). Given this assumption: a. What is the expected percentage Increase In net operating Income for next year? b. What Is the expected amount of net operating Income for next year? (Do not prepare an Income statement; use the degree of operating leverage to compute your answer.) Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2…arrow_forward
- Magic Realm, Incorporated, has developed a new fantasy board game. The company sold 26,400 games last year at a selling price of $64 per game. Fixed expenses associated with the game total $440,000 per year, and varlable expenses are $44 per game. Production of the game is entrusted to a printing contractor. Varlable expenses consist mostly of payments to this contractor. Required: 1-a. Prepare a contribution format Income statement for the game last year. 1-b. Compute the degree of operating leverage. 2 Management is confident that the company can sell 33,792 games next year (an increase of 7,392 games, or 28%, over last year). Glven this assumption: a. What is the expected percentage Increase In net operating Income for next year? b. What Is the expected amount of net operating Income for next year? (Do not prepare an Income statement; use the degree of operating leverage to compute your answer.) Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2…arrow_forwardMagic Realm, Incorporated, has developed a new fantasy board game. The company sold 28,800 games last year at a selling price of $61 per game. Fixed expenses associated with the game total $480,000 per year, and variable expenses are $41 per game. Production of the game is entrusted to a printing contractor. Variable expenses consist mostly of payments to this contractor. Required: 1 - a. Prepare a contribution format income statement for the game last year. 1-b . Compute the degree of operating leverage. 2. Management is confident that the company can sell 35, 712 games next year (an increase of 6,912 games, or 24%, over last year). Given this assumption: a. What is the expected percentage increase in net operating income for next year? b. What is the expected amount of net operating income for next year? (Do not prepare an income statement; use the degree of operating leverage to compute your answer.)arrow_forwardQ-Constructions has tasked you to investigate the number of construction projects per year for which the company would need to break-even and make a profit of $500,000 per year. The average price of a building contract is $700,000 per project. The following are the fixed and variable costs of Q-Constructions in Table 2: Description Cost Office Space 55,000 Professional Staff Salaries 205,000 Insurances 50,000 Machine Maintenance 80,000 Website Management 30,000 On-site workers’ salaries $120,000 per project Average Material Cost 60% of the project price per project Table 2: Associated Costs of Q-Constructions Use this information above to complete the requested analyses below. Calculate: The break-even number of projects needed by the company. The income made by the company at break-even. Calculate the new number of projects that need to be completed to maintain a profit of $500,000 per year.arrow_forward
- Q-Constructions has tasked you to investigate the number of construction projects per year for which the company would need to break-even and make a profit of $500,000 per year. The average price of a building contract is $700,000 per project. The following are the fixed and variable costs of Q-Constructions in Table 2: Description Cost Office Space 55,000 Professional Staff Salaries 205,000 Insurances 50,000 Machine Maintenance 80,000 Website Management 30,000 On-site workers’ salaries $120,000 per project Average Material Cost 60% of the project price per project Table 2: Associated Costs of Q-Constructions Use this information above to complete the requested analyses below. Calculate: The break-even number of projects needed by the company. The income made by the company at break-even. Show all working out including the modelling and solution steps. Q-Constructions is interested in making a profit per year to ensure the…arrow_forwardQ-Constructions has tasked you to investigate the number of construction projects per year for which the company would need to break-even and make a profit of $500,000 per year. The average price of a building contract is $700,000 per project. The following are the fixed and variable costs of Q-Constructions in Table 2: Description Cost Office Space 55,000 Professional Staff Salaries 205,000 Insurances 50,000 Machine Maintenance 80,000 Website Management 30,000 On-site workers’ salaries $120,000 per project Average Material Cost 60% of the project price per project Table 2: Associated Costs of Q-Constructions Use this information above to complete the requested analyses below. Calculate: The break-even number of projects needed by the company. The income made by the company at break-even. Show all working out including the modelling and solution steps. Q-Constructions is interested in making a profit per year to ensure the…arrow_forwardQ-Constructions has tasked you to investigate the number of construction projects per year for which the company would need to break-even and make a profit of $500,000 per year. The average price of a building contract is $700,000 per project. The following are the fixed and variable costs of Q-Constructions in Table 2: Description Cost Office Space 55,000 Professional Staff Salaries 205,000 Insurances 50,000 Machine Maintenance 80,000 Website Management 30,000 On-site workers’ salaries $120,000 per project Average Material Cost 60% of the project price per project Table 2: Associated Costs of Q-Constructions Use this information above to complete the requested analyses below. A) Calculate: The break-even number of projects needed by the company. The income made by the company at break-even. Show all working out including the modelling and solution steps. B) Q-Constructions is interested in making a profit per year to ensure…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Elements of cost | Direct and Indirect: Material, Labor, & Expenses; Author: Educationleaves;https://www.youtube.com/watch?v=UFBaj6AHjHQ;License: Standard youtube license