Construction Accounting And Financial Management (4th Edition)
4th Edition
ISBN: 9780135232873
Author: Steven J. Peterson MBA PE
Publisher: PEARSON
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Chapter 11, Problem 10P
To determine
Compute the profit generated by the estimator, project management, and the excavation crew on the given project.
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Hicks Contracting collects and analyzes cost data in order to track the cost of installing decks on new home construction jobs. The following are some of the costs that they incur. Classify these costs as fixed or variable costs and as product or period costs. A. Lumber used to construct decks ($12.00 per square foot) B. Carpenter labor used to construct decks ($10 per hour) C. Construction supervisor salary ($45,000 per year) D. Depreciation on tools and equipment ($6,000 per year) E. Selling and administrative expenses ($35,000 per year) F. Rent on corporate office space ($34,000 per year) G. Nails, glue, and other materials required to construct deck (varies per job)
4. Hicks Contracting collects and analyzes cost data in order to track the cost of installing decks on new home construction jobs. The following are some of the costs that they incur. Classify these costs as fixed or variable costs and as product or period costs.
Costs
Variable / Fixed
Product / Period
Lumber used to construct decks ($12.00 per square foot)
Carpenter labor used to construct decks ($10 per hour)
Construction supervisor salary ($45,000 per year)
Depreciation on tools and equipment ($6,000 per year)
Selling and administrative expenses ($35,000 per year)
Rent on corporate office space ($34,000 per year)
Nails, glue, and other materials required to construct deck (varies per job)
Patterson Lawn Co. wants to determine the cost of each lawn care maintenance job. The Company has two operating departments, one that performs lawn care services for commercial properties and one that services residential properties. Both operating departments are supported by two service departments, administrative and machine maintenance. Costs for each of these supporting departments are as follows:
Administrative
Machine Maintenance
Total cost
$576,000
$3,825,000
The following estimates that are related to the operating departments is as follows:
Commercial
Residential
Total
properties
properties
# of employees
68
60
128
# of customers
225
260
485
# of billable hours
23,000
22,000
45,000
Total overhead cost*
$
525,000
$
450,000
$
975,000
*Note that total overhead cost includes costs allocated from service departments and other overhead costs.
The Company uses the…
Chapter 11 Solutions
Construction Accounting And Financial Management (4th Edition)
Ch. 11 - How can the estimator increase the profit the...Ch. 11 - Prob. 2DQCh. 11 - What are the six ways to allocate overhead to...Ch. 11 - Why is it important for profit center managers to...Ch. 11 - Prob. 5DQCh. 11 - What are the three ways that job-based profit...Ch. 11 - Prob. 7DQCh. 11 - In Figure 2-8, why was equipment repairs and...Ch. 11 - Your company completed the site work for the South...Ch. 11 - Prob. 10P
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