Construction Accounting And Financial Management (4th Edition)
4th Edition
ISBN: 9780135232873
Author: Steven J. Peterson MBA PE
Publisher: PEARSON
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Chapter 4, Problem 12P
Determine over-and underbillings for a company with the following information:
Job Number: 318
Job Name: Mountain Peak Office Remodel
Current Contract Amount: $256,852
Total Estimated Cost at Completion: $225,236
Actual Costs to Date: $202,138
Total Billed: $252,253
Job Number: 319
Job Name: East Street Restaurant
Current Contract Amount: $350,199
Total Estimated Cost at Completion: $310,564
Actual Costs to Date: $152,364
Total Billed: $178,256
Job Number: 320
Job Name: Market Street Warehouse
Current Contract Amount: $55,123
Total Estimated Cost at Completion: $45,224
Actual Costs to Date: $5,211
Total Billed: $5,500
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Bennette Corporation has provided the following data concerning its overhead costs for the coming year:
Wages and salaries
$ 450,000
Depreciation
175,000
Rent
195,000
Total
$ 820,000
The company has an activity-based costing system with the following three activity cost pools and estimated activity for the coming year:
Activity Cost Pool
Total Activity
Assembly
35,000
labor-hours
Order processing
450
orders
Other
Not applicable
The Other activity cost pool does not have a measure of activity; it is used to accumulate costs of idle capacity and organization-sustaining costs.
The distribution of resource consumption across activity cost pools is given below:
Activity Cost Pools
Total
Assembly
Order Processing
Other
Wages and salaries
30%
25%
45%
100%
Depreciation
15%
45%
40%
100%
Rent
35%
30%
35%
100%
The activity rate for the Order Processing activity cost pool is closest to:
Multiple…
Robin Company reported the following costs for the current month:
Direct materials used
Direct labor
Sales salaries
Indirect labor
Production manager's salary
Marketing costs
Factory lease
What are Robin's prime costs?
Multiple Choice
O
O
O
$60,800
$56,000
$75,200
$65.600
$ 24,000
36,800
19,200
4,800
9,600
14,400
6,400
Note: The 100 nonroutine jobs are included in the total of 500 jobs. Both nonroutine jobs and routine jobs require estimating and
setup.
Costs for the Year
Wages and salaries
Disposal fees
Equipment depreciation
On-site supplies
Office expenses
Licensing and insurance
$ 414,000
808,000
94,000
61,000
310,000
510,000
$ 2,197,000
Total cost
Distribution of Resource Consumption Across Activities
Estimating
Removing and Job
Setup
10%
TTT11
Working on
Nonroutine
Total
Jobs
30%
Asbestos
Other
Wages and salaries
Disposal fees
Equipment depreciation
On-site supplies
Office expenses
Licensing and insurance
50%
10%
100%
70%
0%
30%
0%
100%
50%
10%
15%
25%
100%
70%
20%
10%
0%
100%
10%
35%
25%
30%
100%
25%
0%
60%
15%
100%
Required:
1. Perform the first-stage allocation of costs to the activity cost pools.
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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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