Construction Accounting And Financial Management (4th Edition)
4th Edition
ISBN: 9780135232873
Author: Steven J. Peterson MBA PE
Publisher: PEARSON
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Question
Chapter 4, Problem 9P
To determine
Ascertain the estimated cost at completion of project and variance for each cost.
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A company is constructing a new production facility. The following costs have been incurred:
Site preparation costs
$50,000
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$26,000
Legal fees
$10,000
Purchase of site
$200,000
Costs incurred to relocate employees to the new facility
$30,000
Administration costs
$50,000
Total costs
$366,000
The architects’ fees relate to the design of the new facility and the legal fees relate to legal advice received on the contract to purchase the site.
The total value that should be recognized as Property, Plant and Equipment for the new facility should be
Question 10Answer
a.
$ 314,000
b.
$ 324,000
c.
$ 344,000
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8. A contractor has a contract to construct the sanitary sewer, water line, storm drain, and street lighting for a new subdivision. The contractor uses the cost codes in Figure 2-6. The original estimate for the sewer was $25,000, and a $3,200 change order has been approved to add a manhole. The sewer work has been completed by the contractor at a cost of $27,365. The original estimate for the waterline was $31,000, and no changes have been made to the budget. The costs to date for the waterline are $31,300 and it is estimated that it will take another $450 to complete the waterline. The water line is being installed by the contractor. The original estimate for the storm drain was $17,000, and no changes have been made to the budget. The contractor has paid $7,236 for materials and estimates that it will cost $9,764 to install the storm drain. The contractor will install the storm drain. The original estimate for the outside lighting was $23,600, and no changes have been made to the…
In connection with surfacing a new highway, a contractor has a choice of two sites on which to set up the asphalt-
mixing plant equipment. The contractor estimates that it will cost $1.25 per cubic yard mile (yd³ -mile) to haul the
asphalt-paving material from the mixing plant to the job location. Factors relating to the two mixing sites are as
follows:
Cost Factor
Average hauling distance
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Flagperson
Site A
6 miles
$1,200
$17,000
$1.25 / yd³ -mile
Not required
Site B
4.3 miles
$5,500
$25,000
$1.25 / yd³ -mile
$96 / day
The job requires 50,000 cubic yards of mixed-asphalt-paving material. It is estimated that four months (17 weeks of
five working days per week) will be required for the job. Compare the two sites in terms of their total costs. Assume
that the cost of the return trip is negligible. A) Which is the better site? B) For the selected site, how many cubic
yards of paving material does the contractor…
Chapter 4 Solutions
Construction Accounting And Financial Management (4th Edition)
Ch. 4 - Define committed costs and provide two examples of...Ch. 4 - Why is labor seldom a committed cost?Ch. 4 - Prob. 3DQCh. 4 - What are overbillings and how do they occur?Ch. 4 - Prob. 5DQCh. 4 - What are the six key principals of internal...Ch. 4 - What should you look for in a construction...Ch. 4 - Prob. 8PCh. 4 - Prob. 9PCh. 4 - Prob. 10P
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