Construction Accounting And Financial Management (4th Edition)
4th Edition
ISBN: 9780135232873
Author: Steven J. Peterson MBA PE
Publisher: PEARSON
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Chapter 10, Problem 22P
To determine
Ascertain the profit and overhead markup.
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Whang Construction Company is a general contractor that specializes in custom residential housing. Each job requires a bid that includes Whang's direct costs and subcontractor costs as well as an amount referred to as “overhead and profit.” Whang's bidding policy is to estimate the costs of direct materials, direct labor, and subcontractors' costs. These are totaled, and a markup is applied to cover overhead and profit. In the coming year, the company believes it will be the successful bidder on 10 jobs with the following total revenues and costs:
Revenue
$8,720,320
Direct materials
$2,245,000
Direct labor
1,741,000
Subcontractors
3,342,000
7,328,000
Overhead and profit
$1,392,320
Required:
1. Given the preceding information, what is the markup percentage on total direct costs?________%
2. Suppose Whang is asked to bid on a job with estimated direct costs of $589,000. What is the bid?$________
Whang Construction Company is a general contractor that specializes in custom residential housing. Each job requires a bid that includes Whang's direct costs and subcontractor costs as well as an amount referred to as “overhead and profit.” Whang's bidding policy is to estimate the costs of direct materials, direct labor, and subcontractors' costs. These are totaled, and a markup is applied to cover overhead and profit. In the coming year, the company believes it will be the successful bidder on 10 jobs with the following total revenues and costs:
Revenue
$9,226,800
Direct materials
$2,212,000
Direct labor
1,834,000
Subcontractors
3,643,000
7,689,000
Overhead and profit
$1,537,800
Required:
1. Given the preceding information, what is the markup percentage on total direct costs? ______%
2. Suppose Whang is asked to bid on a job with estimated direct costs of $553,000. What is the bid? $_________
3. Briefly explain how Whang Construction’s accountant might…
Jones’s proposal for a building contract was $125,500. After finding that her bid was low, she checked her
estimates and found that an item of $25,000 had been incorrectly recorded as $2,500 in making the
summary of costs. What can she do about the situation? Explain.
Chapter 10 Solutions
Construction Accounting And Financial Management (4th Edition)
Ch. 10 - What are some of the ways a company can increase...Ch. 10 - Prob. 2DQCh. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - A construction company has total revenues of...Ch. 10 - A construction company has total revenues of...Ch. 10 - A construction company has total revenues of...Ch. 10 - A construction company has total revenues of...Ch. 10 - Determine the break-even volume of work for a...Ch. 10 - Determine the break-even volume of work for a...
Ch. 10 - Determine the break-even volume of work for a...Ch. 10 - Determine the break-even volume of work for a...Ch. 10 - A construction company has a fixed overhead of...Ch. 10 - A construction company has a fixed overhead of...Ch. 10 - Determine the break-even contribution margin ratio...Ch. 10 - Determine the break-even contribution margin ratio...Ch. 10 - Determine the break-even contribution margin ratio...Ch. 10 - Determine the break-even contribution margin ratio...Ch. 10 - Determine the profit and overhead markup for a...Ch. 10 - Determine the profit and overhead markup for a...Ch. 10 - Prob. 21PCh. 10 - Prob. 22P
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