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Before you begin this assignment, review the Tying It All Together feature in the chapter Granite Construction Incorporated is a major construction firm whose projects include roads, highways, bridges, dams, tunnels, mass transit facilities, and airports. Suppose Granite Construction wants to bid on a project to construct a bridge in Nevada Estimators have projected the expected direct materials costs to be $55 million and the direct labor costs (including design and construction) to be $30 million. The company uses a predetermined overhead allocation rate of 50% of direct labor costs and a markup of 20% of total costs. Requirements What items would most likely be included in direct materials? Calculate the estimated direct costs, the indirect costs, and the total costs for the project. What amount should Granite Construction bid for the project? Why does Granite Construction include both direct and indirect costs when calculating the markup?

Before you begin this assignment, review the Tying It All Together feature in the chapter Granite Construction Incorporated is a major construction firm whose projects include roads, highways, bridges, dams, tunnels, mass transit facilities, and airports. Suppose Granite Construction wants to bid on a project to construct a bridge in Nevada Estimators have projected the expected direct materials costs to be $55 million and the direct labor costs (including design and construction) to be $30 million. The company uses a predetermined overhead allocation rate of 50% of direct labor costs and a markup of 20% of total costs. Requirements What items would most likely be included in direct materials? Calculate the estimated direct costs, the indirect costs, and the total costs for the project. What amount should Granite Construction bid for the project? Why does Granite Construction include both direct and indirect costs when calculating the markup?

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments
Section: Chapter Questions
Problem 7P: Self-Construction Olson Machine Company manufactures small and large milling machines. Selling...
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Before you begin this assignment, review the Tying It All Together feature in the chapter

Granite Construction Incorporated is a major construction firm whose projects include roads, highways, bridges, dams, tunnels, mass transit facilities, and airports. Suppose Granite Construction wants to bid on a project to construct a bridge in Nevada Estimators have projected the expected direct materials costs to be $55 million and the direct labor costs (including design and construction) to be $30 million. The company uses a predetermined overhead allocation rate of 50% of direct labor costs and a markup of 20% of total costs.

Requirements

  1. What items would most likely be included in direct materials?
  2. Calculate the estimated direct costs, the indirect costs, and the total costs for the project.
  3. What amount should Granite Construction bid for the project?
  4. Why does Granite Construction include both direct and indirect costs when calculating the markup?
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