Cost Estimation And Cost Analysis

This means that as important as costing is, it ensures that the company can make a profit from the project or they will not want to extend their business if it will lose them money as they will have to pay out more for construction, rent, labour and bills

Activity-based costing is a system of accounting that puts emphases on activities performed to produce products or services (Schneider, 2012). In this costing system every activity is assigned a cost (Schneider, 2012). The goal of activity-based costing is not to allot common costs to products but to measure and then price out all the resources used for activities that sustain the production and delivery of products and services to customers (Mazumder, 2007). Activity-based costing is a cost system that is useful in business because of the fact that it does account for the cost of the products, resources used to produce the product and delivery of the product.

This paper provides a brief presentation of Activity-Based Costing methodology, how is used as well as its short comings.

In conclusion, many factors that influence the approvals and denials of projects and a financial plan will present a clear picture of the budget needed to cover the expenses. The expenses are for the construction

2. In selecting an accounting method for a newly-contracted long-term construction project, the principal factor to be considered should be what? Page 933

The first proposed action would be the setting up of management objectives for the project and milestones for the project to confirm whether the current cost structure and the present duration is within the scope and objectives of the project. Setting up of milestones would also be ideal for evaluating the project success by looking at the earned value of the project. The evaluation of project success should happen on a continual basis for the project implementing team to have a structure for making changes whenever there are opportunities to hasten the pace of finishing individual tasks.

budget. As the project evolves, additional information is discovered and further estimates are produced. This is an extremely important process and we cannot emphasize enough the need for this re‐estimation or re‐budgeting process at each phase of the project. In any case, for the purpose of this article, we will call the revised budget the "actual budget." Another standard activity is to provide management with an expected cash flow. From a financial perspective this is an important activity, but it also can be used as your cost expectation.

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Show all of your calculations and processes. Describe your answer for each question in complete sentences, whenever it is necessary.

An organization costing system is a system that helps the management with the strategy planning while the system plays an important role in providing accurate cost information about the products and customers (Curtin, 2006). UPS utilizes the Activity-Based Costing (ABC) system. ABC assumes that activities cause costs and that cost objects create the demand for activities (Marx,

- Cost and estimation is done so that cost and schedule estimates are done developed during this time.

All outlined project functions should be provided. However, costs should be reduced to a minimum where possible. This is all done without compromising project functions.

Develop a process inventory: which contains the inventory of all the processes where there are known and unknown processes. This helps to make a good start with one process and complete them in a sequential manner without failure.

* Many IT professionals think that preparing cost estimates is a job for accountants when in fact, it is a very demanding and important skill that project managers need

1. Explain the strategic role of activity-based costing 2. Describe activity-based costing (ABC), the steps in developing an ABC system, and the benefits and limitations of an ABC system 3. Determine product costs under both the volume-based method and the activity-based method and contrast the two 4. Explain activity-based management (ABM) 5. Describe how ABC/M is used in manufacturing companies, service companies, and governmental organizations 6. Use an activity-based approach to analyze customer profitability 7. Identify key factors for successful ABC/M implementation