Ferdinand Construction (FC) manages the design and construction of hospitals. Ferdinand has developed several formulas that it uses to quote jobs. These include costs of basic construction but exclude equipment and furniture. These estimates are also dependent on the purpose of the hospital (teaching hospitals are more costly to build) and location (downtown hospitals are more costly to build). Both of these are based on the building costs. The estimated costs also depend on whether the hospital has few or many stories (high-rise buildings are more expensive). The following are the cost estimates for one region in the Northeast: Design costs $ 15,000,000 Building costs – per square foot (low-rise) 300 Building costs – per square foot (high-rise) 360 Downtown premium 60% Teaching hospital premium 20% Required: A local university medical school has asked Ferdinand Construction to provide a quote on a high-rise teaching hospital located in the city center downtown. The university estimates the hospital will be 300,000 square feet in total. Based on the engineering estimates above, what will such a hospital cost to build? (Enter your answers in thousands.)
Ferdinand Construction (FC) manages the design and construction of hospitals. Ferdinand has developed several formulas that it uses to quote jobs. These include costs of basic construction but exclude equipment and furniture. These estimates are also dependent on the purpose of the hospital (teaching hospitals are more costly to build) and location (downtown hospitals are more costly to build). Both of these are based on the building costs. The estimated costs also depend on whether the hospital has few or many stories (high-rise buildings are more expensive). The following are the cost estimates for one region in the Northeast: Design costs $ 15,000,000 Building costs – per square foot (low-rise) 300 Building costs – per square foot (high-rise) 360 Downtown premium 60% Teaching hospital premium 20% Required: A local university medical school has asked Ferdinand Construction to provide a quote on a high-rise teaching hospital located in the city center downtown. The university estimates the hospital will be 300,000 square feet in total. Based on the engineering estimates above, what will such a hospital cost to build? (Enter your answers in thousands.)
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 20E: Activity-based costing for a service company Crosswinds Hospital plans to use activity-based costing...
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Ferdinand Construction (FC) manages the design and construction of hospitals. Ferdinand has developed several formulas that it uses to quote jobs. These include costs of basic construction but exclude equipment and furniture. These estimates are also dependent on the purpose of the hospital (teaching hospitals are more costly to build) and location (downtown hospitals are more costly to build). Both of these are based on the building costs. The estimated costs also depend on whether the hospital has few or many stories (high-rise buildings are more expensive). The following are the cost estimates for one region in the Northeast:
| Design costs | $ 15,000,000 |
|---|---|
| Building costs – per square foot (low-rise) | 300 |
| Building costs – per square foot (high-rise) | 360 |
| Downtown premium | 60% |
| Teaching hospital premium | 20% |
Required:
A local university medical school has asked Ferdinand Construction to provide a quote on a high-rise teaching hospital located in the city center downtown. The university estimates the hospital will be 300,000 square feet in total. Based on the engineering estimates above, what will such a hospital cost to build? (Enter your answers in thousands.)
Transcribed Image Text:Design costs
Building costs
Downtown premium
Teaching hospital premium
Estimated cost
Amounts in
thousands
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