Subject:- accounting Markup on Cost, Cost-Based PricingWhang 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 comingyear, the company believes it will be the successful bidder on 10 jobs with the following total revenues and costs:$9,712,920RevenueDirect materialsDirect laborSubcontractorsOverhead and profit$2,222,0002,011,0003,600,000%7,833,000$1,879,920Required: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 $579,000. What is the bid?3. Briefly explain how Whang Construction's accountant might utilize data analytics to help decide on the markup percentage to use in setting prices. (see Exhibits 2.5 and 2.6, for a review of data analytics types.)However, one logical use of data analytics would be for the accountant to utilizeanalytics to assess the markup percentage applied by other similar companies in the industry.

Markup direct cost refers to the additional percentage or amount added to the direct cost of a…

Answered: hang Construction Company is a general…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 13E

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Markup on Cost, Cost-Based Pricing 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 $8,386,400 Direct materials $2,281,000 Direct labor 1,884,000 Subcontractors 3,459,000 7,624,000 Overhead and profit $762,400 Required: 1. Given the preceding information, what is the markup percentage on total direct costs?fill in the blank 1 % 2. Suppose Whang is asked to bid on a job with estimated direct costs of $559,000. What is the bid?$fill in the blank 2 3.…
Markup on Cost, Cost-Based Pricing Arthur Quillen Construction Company is a general contractor that specializes in custom residential housing. Each job requires a bid that includes Quillen’s direct costs and subcontractor costs as well as an amount referred to as “overhead and profit.” Quillen’s bidding policy is to estimate the costs of direct materials, direct labor, and subcontractors’ costs. These are totaled, and amarkup 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: Required:1. Given the preceding information, what is the markup percentage on total direct costs?2. Suppose Quillen is asked to bid on a job with estimated direct costs of $570,000. What is thebid? If the customer complains that the profit seems pretty high, how might Quillen counterthat accusation?
Markup on Cost, Cost-Based Pricing 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 $8,553,660 Direct materials $2,281,000 Direct labor 1,937,000 Subcontractors 3,488,000 7,706,000 Overhead and profit $847,660 Required: 1. Given the preceding information, what is the markup percentage on total direct costs?fill in the blank 1 % 2. Suppose Whang is asked to bid on a job with estimated direct costs of $560,000. What is the bid?$fill in the blank 2
Assigning Direct Labor Costs to Jobs TAC Industries Inc. sells heavy equipment to large corporations and federal, state, and local governments. Corporate sales are the result of a competitive bidding process, where TAC competes against other companies based on selling price. Sales to the government, however, are determined on a cost plus basis, where the selling price is determined by adding a fixed markup percentage to the total job cost. Tandy Lane is the cost accountant for the Equipment Division of TAC Industries Inc. The division is under pressure from senior management to improve operating income. As Tandy reviewed the division’s job cost sheets, she realized that she could increase the division’s operating income by moving a portion of the direct labor hours that had been assigned to the job cost sheets of corporate customers onto the job order costs sheets of government customers. She believed that this would create a “win–win” for the division by (1) reducing the cost of…
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Customer Profitability Analysis Elite Services, Inc. provides residential painting services for three home building companies, Brookside, Edgewater, and Hillrose, and it uses a job costing system for determining the costs for completing each job. The job cost system does not capture any cost incurred by Elite for return touchups and refinishes after the homeowner occupies the home. Elite paints each house on a square footage contract price, which includes painting as well as all refinishes and touchups required after the homes are occupied. Each year, the company generates about one-third of its total revenues and gross profits from each of the three builders. The Elite owner has observed that the builders, however, require substantially different levels of support following the completion of jobs. The following data have been gathered: Support Activity Driver Major refinishes Hours on jobs Number of visits Touchups Communication Number of calls Major Builder Refinishes Touchups…
Job-Order Costing: Housing Sutton Construction Inc. is a privately held, family-founded corporation that builds single- and multiple-unit housing. Most projects Sutton Construction undertakes involve the construction of multiple units. Sutton Construction has adopted a job-order costing system for determining the cost of each unit. The costing system is fully computerized. Each project's costs are divided into the following five categories: General conditions, including construction site utilities, project insurance permits and licenses, architect's fees, decorating, field office salaries, and cleanup costs. Hard costs, such as subcontractors, direct materials, and direct labor. Finance costs, including title and recording fees, inspection fees, and taxes and discounts on mortgages. Land costs, which refer to the purchase price of the construction site. Marketing costs, such as advertising, sales commissions, and appraisal fees. Recently, Sutton Construction purchased land for the…
Hicks Contracting collects and analyzes cost data in order to track the cost of installing decks on new home construction jobs. The following are some of the costs that they incur. Classify these costs as fixed or variable costs and as product or period costs. A. Lumber used to construct decks ($12.00 per square foot) B. Carpenter labor used to construct decks ($10 per hour) C. Construction supervisor salary ($45,000 per year) D. Depreciation on tools and equipment ($6,000 per year) E. Selling and administrative expenses ($35,000 per year) F. Rent on corporate office space ($34,000 per year) G. Nails, glue, and other materials required to construct deck (varies per job)
Q.1 (a) Compare / contrast. Why are these two different? Inventoriable costs and period costs. Direct costs and indirect costs. Manufacturing costs and non-manufacturing costs. Period costs and product costs. Operating costs and non-operating costs. Q.1 (b) A client approached to Incredible Fabricating and Manufacturing for a one-time special order for Steel doors. These Steel doors are fabricated and manufactured to local clients regularly. The cost per unit information apply for deals to regular clients: Direct materials $1,982 Direct labor 810 Variable manufacturing overhead 1,296 Fixed manufacturing overhead 2,808 Total manufacturing costs 6,896 Markup (50%)…
Which of the following costs at a manufacturing company would be treated as a product cost under variable costing? Multiple Choice direct material cost property taxes on the factory building sales manager's salary sales commissions
V&S Mechanical sells and services plumbing, heating, and air conditioning systems. V&S's cost accounting system tracks two cost categories: direct labor and direct materials V&S uses a time-and-materials pricing system, with direct labor marked up 100% and direct materials marked up 50% to recover indirect costs of support staff, support materials, and shared equipment and tools and to earn a profit (Click the icon to view the cost information) Read the requirements Requirement 1. If Dryden presents Lowry with the replace or repair options, what price would he quote for each? Complete the table below to determine the price Dryden would quote for each option Labor Materials Total Price Repair option Replace option Requirements 1. if Dryden presents Lowry with the replace or repair options, what price would he quote for each? 2. If the two options were equally effective for the 3 years that Lowry intends to live in the home, which option would she choose? 3. if Dryden's objective is to…
Customer Profitability Analysis HyStandard Services, Inc. provides residential painting services for three home building companies, Alpine, Blue Ridge, and Pineola, and it uses a job costing system for determining the costs for completing each job. The job cost system does not capture any cost incurred by HyStandard for return touchups and refinishes after the homeowner occupies the home. HyStandard paints each house on a square footage contract price, which includes painting as well as all refinishes and touchups required after the homes are occupied. Each year, the company generates about one-third of its total revenues and gross profits from each of the three builders. The HyStandard owner has observed that the builders, however, require substantially different levels of support following the completion of jobs. The following data have been gathered: Cost per Driver Unit $60 100 40 Support activity Driver Major refinishes Touchups Hours on jobs Number of visits Communication Number…

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