Cornerstones of Cost Management
4th Edition
ISBN: 9780357155905
Author: Don R. Hansen; Maryanne M. Mowen
Publisher: Cengage Limited
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Question
Chapter 18, Problem 13E
1.
To determine
Calculate the mark up percentage on total direct costs.
2.
To determine
Determine the bid and explain the manner in which Company AQ counters accusation.
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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
$8,634,330
Direct materials
$2,234,000
Direct labor
1,862,000
Subcontractors
3,545,000
7,641,000
Overhead and profit
$993,330
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 $599,000. What is the bid?$________
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…
Johnny Lopez Construction Company is a general contractor that specializes in custom
residential housing. Each job requires a bid that includes Lopez's direct costs and
subcontractor costs as well as an amount referred to as "overhead and profit." Lopez'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
P8,740,000
Direct materials
P2,250,000
1,900,000
3,450,000
Direct labor
Subcontractors
7,600,000
PL140.000
Overhead and profit
Required:
1. Given the preceding information, what is the markup percentage on
total direct costs?
2. Suppose Lopez is asked to bid on a job with estimated direct costs of
P 750,000. What is the bid? If the customer complains that the profit
seems pretty high, how might Lopez counter that accusation?
Chapter 18 Solutions
Cornerstones of Cost Management
Ch. 18 - Define price elasticity of demand. Give an example...Ch. 18 - What are the features of a perfectly competitive...Ch. 18 - How do you calculate the markup on cost of goods...Ch. 18 - Prob. 4DQCh. 18 - Prob. 5DQCh. 18 - Prob. 6DQCh. 18 - What is price discrimination? Is it legal?Ch. 18 - Prob. 8DQCh. 18 - Prob. 9DQCh. 18 - Suppose that Alpha Company has four product lines,...
Ch. 18 - How does absorption costing differ from variable...Ch. 18 - What are some advantages and disadvantages of...Ch. 18 - Prob. 13DQCh. 18 - Prob. 14DQCh. 18 - Describe the product life cycle. How do unit-level...Ch. 18 - Ventana Window and Wall Treatments Company...Ch. 18 - Kaune Food Products Company manufactures canned...Ch. 18 - Pattison Products, Inc., began operations in...Ch. 18 - Refer to Cornerstone Exercise 18.3. Required: 1....Ch. 18 - Saginaw Company is a garden products wholesale...Ch. 18 - Iliff, Inc., produces and sells two types of...Ch. 18 - Iliff, Inc., produces and sells two types of...Ch. 18 - Refer to Cornerstone Exercise 18.6. Required: 1....Ch. 18 - Budgeted unit sales for the entire countertop oven...Ch. 18 - Prob. 10ECh. 18 - Prob. 11ECh. 18 - Prob. 12ECh. 18 - Prob. 13ECh. 18 - Many different businesses employ markup on cost to...Ch. 18 - Flaherty, Inc., has just completed its first year...Ch. 18 - During its first year of operations, Snobegon,...Ch. 18 - Prob. 17ECh. 18 - Otero Fibers, Inc., specializes in the manufacture...Ch. 18 - Data for Torleson Company are as follows:...Ch. 18 - Eastman, Inc., manufactures and sells three...Ch. 18 - Prob. 21ECh. 18 - The following information pertains to three...Ch. 18 - Thebes Company had the following information: What...Ch. 18 - Banwood Company has the following information for...Ch. 18 - Jasmine Companys expected sales were 2,000 units...Ch. 18 - Prob. 26PCh. 18 - Snyder Company produced 90,000 units during its...Ch. 18 - The following information pertains to Vladamir,...Ch. 18 - Jellison Company had the following operating data...Ch. 18 - San Mateo Optics, Inc., specializes in...Ch. 18 - Haysbert Company provides management services for...Ch. 18 - Sulert, Inc., produces and sells gel-filled ice...Ch. 18 - Prob. 33PCh. 18 - Dana Baird was manager of a new Medical Supplies...Ch. 18 - Bill Fremont, division controller and CMA, was...Ch. 18 - Dantrell Palmer has just been appointed manager of...Ch. 18 - Prob. 37PCh. 18 - Porter Insurance Company has three lines of...Ch. 18 - Porter Insurance Company has three lines of...Ch. 18 - Olin Company manufactures and distributes...Ch. 18 - Shannon, Inc., has two divisions. One produces and...Ch. 18 - Prob. 42P
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