Construction Accounting And Financial Management (4th Edition)
4th Edition
ISBN: 9780135232873
Author: Steven J. Peterson MBA PE
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 11, Problem 12P
Your company worked on the projects shown in Table 11-3 during the last year. Analyze the different profit centers based on their gross profit margins, their return on cash invested in the projects, and their use of management’s time. One project manager can oversee four subdivisions or one road construction project.
Table 11-3 Jobs for Problem 12
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Please resolve this problem using ABC method
Suppose that we have a problem in which three people have been hired in the company's headquarters and are working on new projects. Their work has R&D nature. The time cycle of the problem is from month 1 to 12. These people have been paid from month 1 to 12 and finally will get two projects in the 5th month. The salaries of these three people have been recorded as overhead expenses in 12 months. According to the ABC method, should the salaries of all these 12 months be divided on these two projects (depending on the complexity of each project) or the sum of salaries of month 1 to 5 or only the salaries of the fifth month should be divided on these two projects?
Thanks to the relevant experts for their response
The cost of the personnel department at the Mason Company has always been charged to the production departments based upon number of employees. Recently, opinions gathered from the department managers indicated that the number of new hires might also be a predictor of personnel costs to be assigned. Total personnel department costs are $120,000.
Department Department Department
Cost Driver A B C
Number of employees 300 250 50
The number of new hires 15 25 10
Required:
Using the above data, prepare a report that contrasts the different amounts of personnel department cost that would be allocated to each of the production departments if the cost driver used is
a. number of employees.
b. the number of new hires.
c. Which cost…
WV Construction has two divisions: Remodeling and New Home Construction. Each division has an on-site supervisor who is paid a salary of $82,000 annually and one salaried estimator who is paid $46,000 annually. The corporate office has two office administrative assistants who are paid salaries of $50,000 and $37,000 annually. The president's salary is $153,000. How much of these salaries are common fixed expenses?
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
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- You are the managerial accountant at Reliable Company and are part of the organization's budgeting committee. You have been assigned to support the marketing department and manage its master budget. The marketing department is responsible for the following: Managing the firm's marketing Hiring subcontractors Selling the consulting expertise to smaller outside firms The department's expenses are as follows: Salaries and benefits of $48,000/month Web site operations of $21,000/ month Online advertising expenses of $15,000/month Miscellaneous expenses of $3,500/month The sales forecast for its consulting services are as follows: April: $190,000 May: $200,000 June: $205,000 The department pays a sales commission of 5%, and this is paid in the following month. Subcontractor expenses are estimated at 45% of sales and are paid the month after they are billed. Consulting fees are collected 20% in the month of sale, 70% in the following month, and 10% in the second month following…arrow_forwardYou are the managerial accountant at Reliable Company and are part of the organization’s budgeting committee. You have been assigned to support the marketing department and manage its master budget. The marketing department is responsible for the following: • Managing the firm's marketing • Hiring subcontractors • Selling the consulting expertise to smaller outside firms The department's expenses are as follows: • Salaries and benefits of $48,000/month • Web site operations of $21,000/ month • Online advertising expenses of $15,000/month • Miscellaneous expenses of $3,500/month The sales forecast for its consulting services are as follows: • April: $190,000 • May: $200,000 • June: $205,000 The department pays a sales commission of 5%, and this is paid in the following month. Subcontractor expenses are estimated at 45% of sales and are paid the month after they are billed. Consulting fees are collected 20% in the month of sale, 70% in the following month, and 10% in…arrow_forwardYou are the managerial accountant at Reliable Company and are part of the organization’s budgeting committee. You have been assigned to support the marketing department and manage its master budget. The marketing department is responsible for the following: • Managing the firm's marketing • Hiring subcontractors • Selling the consulting expertise to smaller outside firms The department's expenses are as follows: • Salaries and benefits of $48,000/month • Web site operations of $21,000/ month • Online advertising expenses of $15,000/month • Miscellaneous expenses of $3,500/month The sales forecast for its consulting services are as follows: • April: $190,000 • May: $200,000 • June: $205,000 The department pays a sales commission of 5%, and this is paid in the following month. Subcontractor expenses are estimated at 45% of sales and are paid the month after they are billed. Consulting fees are collected 20% in the month of sale, 70% in the following month, and 10% in…arrow_forward
- You are the managerial accountant at Reliable Company and are part of the organization’s budgeting committee. You have been assigned to support the marketing department and manage its master budget. The marketing department is responsible for the following: • Managing the firm's marketing • Hiring subcontractors • Selling the consulting expertise to smaller outside firms The department's expenses are as follows: • Salaries and benefits of $48,000/month • Web site operations of $21,000/ month • Online advertising expenses of $15,000/month • Miscellaneous expenses of $3,500/month The sales forecast for its consulting services are as follows: • April: $190,000 • May: $200,000 • June: $205,000 The department pays a sales commission of 5%, and this is paid in the following month. Subcontractor expenses are estimated at 45% of sales and are paid the month after they are billed. Consulting fees are collected 20% in the month of sale, 70% in the following month, and 10% in…arrow_forwardYou are the managerial accountant at Reliable Company and are part of the organization’s budgeting committee. You have been assigned to support the marketing department and manage its master budget. The marketing department is responsible for the following: • Managing the firm's marketing • Hiring subcontractors • Selling the consulting expertise to smaller outside firms The department's expenses are as follows: • Salaries and benefits of $48,000/month • Web site operations of $21,000/ month • Online advertising expenses of $15,000/month • Miscellaneous expenses of $3,500/month The sales forecast for its consulting services are as follows: • April: $190,000 • May: $200,000 • June: $205,000 The department pays a sales commission of 5%, and this is paid in the following month. Subcontractor expenses are estimated at 45% of sales and are paid the month after they are billed. Consulting fees are collected 20% in the month of sale, 70% in the following month, and 10% in…arrow_forwardSwanson Manufacturing uses activity-based management to analyze the cost of non-value-added activities across its value chain. The company's annual budgeted costs in its Human Resources Department (HR) total $5 million. This amount is allocated to 3 cost pools, as follows: (1) 20% to Hiring & Recruiting; (2) 50% to Payroll; and (3) 30% to Employee Benefits. There are 3 activity cost drivers associated with HR's 3 cost pools: (1) travel; (2) information processing; and (3) professional development. These activities drive each of HR's cost pool amounts as follows: Hiring & Recruiting Cost Pool Drivers -- 70% travel activities -- 12% information processing activities -- 18% professional development activities Payroll Cost Pool Drivers -- 10% travel activities -- 65% information processing activities -- 25% professional development activities Employee Benefits Cost Pool Drivers -- 10% travel activities -- 30% information processing activities -- 60% professional development…arrow_forward
- Within a company is a (micro)economy that is monitored by the accounting procedures. In terms of the accounts, the various departments "produce" costs, some of which are internal and some of which are direct costs. This problem shows how an open Leontief model can be used to determine departmental costs. The sales department of an auto dealership charges 10% of its total monthly costs to the service department, and the service department charges 20% of its total monthly costs to the sales department. During a given month, the direct costs are $88,200 for sales and $29,400 for service. Find the total costs (in dollars) of each department. (Round your answers to the nearest whole number.) sales department $ service department $arrow_forwardThe Chief Operations Officer (COO) of a manufacturing firm recommends one of the manufacturing sites to undergo a process improvement initiative. He claims that this project will enable the company to realize a net savings of at least $3.25 Mln. The Chief Financial Officer (CFO) of the company tasked you to conduct a financial analysis to verify the claims of the COO. After performing cost analysis, you estimated that the project will require an initial investment of $2 Mln today and $1 Mln in Year 1. Afterwards, the initiative will yield an annual cost savings of $850k from Year 2 to Year 10. You assume that these cost savings are realized at the end of each year. (a) Suppose that you use a discount rate of 5%. Will the resulting net savings support the claim of the COO? (b) Determine the Internal Rate of Return (IRR) of the process improvement initiative. (c) Show the NPV profile of the project.arrow_forwardB-You is a consulting firm that works with managers to improve their interpersonal skills. Recently, a representative of a high-tech research firm approached B-You's owner with an offer to contract for one year with B-You to improve the interpersonal skills of a newly hired manager. B-You reported the following costs and revenues during the past year. B-YOU Annual Income Statement Sales revenue $ 234,300 Costs Labor 111,000 Equipment lease 16,000 Rent 13,500 Supplies 10,300 Officers' salaries 70,000 Other costs 7,000 Total costs $ 227,800 Operating profit (loss) $ 6,500 If B-You decides to take the contract to help the manager, it will hire a full-time consultant at $84,000. Equipment lease will increase by 5 percent. Supplies will increase by an estimated 10 percent and other costs by 15 percent. The existing building has space for the new consultant. No new offices will be necessary for this work. Problem 1-44 (Algo) Part a…arrow_forward
- Mackenzie Consulting computes the cost of each consulting engagement by adding a portion of the firm wide overhead costs to the labor cost of the consultants on the engagement. The overhead costs are assigned to each consulting engagement using a cost driver rate based on consultant labor costs. Mackenzie Consulting’s overhead costs are $5 million per year, and total consultant labor cost is estimated at $2.5 million per year. Required (a) What is Mackenzie Consulting’s cost driver rate? (b) If the consultant labor cost on an engagement is $25,000, what cost will Mackenzie Consulting compute as the total cost of the consulting engagement?arrow_forwardJose Ruiz manages a car dealer’s service department. His department is organized as a cost center. Costs for a recent quarter are shown below. List the costs that would appear on a responsibility accounting report for the service department. Cost of parts . $22,400 Mechanics’ wages . 14,300 Manager’s salary 8,000 Building depreciation (allocated) 4,500 Shop supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,200 Utilities (allocated) . 800 Administrative costs (allocated) 2,200arrow_forwardA recent engineering was given the job of determining the best production rate for a new type of casting in a foundry. After experimenting with many combinations of hourly production rates and total production cost per hour, he summarized his findings in table below (column 2). The engineering then talked to the firm’s marketing specialist, who provided estimates of selling price per casting as a function of production output (see table 1 column 3). There are 8,760 hours in a year. What production rate would you recommend to maximize total profits per year? a) 100 ; b) 200 ; c) 300 ; d) 400 ; e) 500 Show your complete solution and computation.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Essentials Of Business AnalyticsStatisticsISBN:9781285187273Author:Camm, Jeff.Publisher:Cengage Learning,
Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Essentials Of Business Analytics
Statistics
ISBN:9781285187273
Author:Camm, Jeff.
Publisher:Cengage Learning,
Excel Applications for Accounting Principles
Accounting
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Cengage Learning
Elements of cost | Direct and Indirect: Material, Labor, & Expenses; Author: Educationleaves;https://www.youtube.com/watch?v=UFBaj6AHjHQ;License: Standard youtube license