Question

In: Finance

2. A contractor has a contract to remove and replace the existing landscape and sidewalks around...

2. A contractor has a contract to remove and replace the existing landscape and
sidewalks around an office building. The work includes demolition of the
existing landscaping and sidewalks, importing fill and grading around the
office building, constructing new concrete sidewalks, and new landscaping.
The contractor uses the cost codes in Figure 2-6. The original estimate for the
demolition was $30,000 and a $5,000 change order has been approved to
remove some unexpected debris found during the demolition. The
demolition work has been completed at a cost of $33,562. The original
estimate for the fill and grading was $17,500 and a $2,000 change order for
importing additional fill to replace the debris has been approved. The fill and
grading costs to date are $17,264 and the cost to complete has been
estimated at $2,236. The original budget for the labor to pour the concrete
was $19,200 and no changes have been made. The concrete labor has been
subcontracted out for $19,200, for which the contractor has received a bill
for $15,200. The original budget for the concrete for the sidewalks was
$9,900 and no changes have been made. The contractor has spent $7,425 for
concrete and estimates that $1,950 of concrete will be needed to complete
the project. The original estimate for the landscaping was $37,500 and no
changes have been made. The landscape work has been subcontracted out for
$37,500. The landscaping work has yet to start and no bills have been
received. Determine the total estimated cost at completion for the project
and the variance for each cost code.

6. Create a spreadsheet to solve Problem 2.

Solutions

Expert Solution

Here we are given various costs involved in contractor work which is accordingly shown in the spreadsheet ,Please see the attached spreadsheet .

The formula used for calculating variance is as follows :

Variance = ( Estimated cost - Actual Cost )

Cost variance (CV), is the difference between the actual cost and the budgeted (estimated) cost, or in other words the cost what we expected to spend difference the actual cost.


Related Solutions

2. Greensward Landscaping enters into a contract with Kent to landscape Hillview Country Club's golf course,...
2. Greensward Landscaping enters into a contract with Kent to landscape Hillview Country Club's golf course, using Intown Nursery to supply trees and shrubbery. Jonas owns a lot next to Hillview Country Club's golf course that will benefit from the improved landscaping. The landscaping is a gift from Kent, a wealthy club member, to Hillview. What type of beneficiary is Hillview?* What type of beneficiary is Jonas?* What type of beneficiary is Intown Nursery?* If Greensward Landscaping refuses to do...
A corporation has decided to replace an existing asset with a newer model. Two years ago,...
A corporation has decided to replace an existing asset with a newer model. Two years ago, the existing asset originally cost $30,000 and was being depreciated under MACRS using a five-year recovery period. The existing asset can be sold for $32,000. The new asset will cost $75,000 and will also be depreciated under MACRS using a five-year recovery period. If the assumed tax rate is 40 percent on ordinary income and capital gains, the initial investment is ______. Select one:...
A corporation has decided to replace an existing asset with a newer model. Two years ago,...
A corporation has decided to replace an existing asset with a newer model. Two years ago, the existing asset originally cost $30,000 and was being depreciated under MACRS using a five-year recovery period. The existing asset can be sold for $45,400. The new asset will cost $75,000 and will also be depreciated under MACRS using a five-year recovery period. If the assumed tax rate is 40 percent on ordinary income and capital gains, the initial investment is ______. Select one:...
The ABC Manufacturing Co. has made a decision to replace an existing production line with new...
The ABC Manufacturing Co. has made a decision to replace an existing production line with new equipment. This project will require several tasks (jobs) with precedence relationships and duration (weeks) as shown in the following table. The project will be finished when activities A-J are all finished. Activity Predecessors Duration (Weeks) A — 5 B — 5 C A 11 D B 9 E C 4 F C, D 10 G E 4 H G 3 I G 4 J...
CAT Construction has been awarded a contract with the City of Newberg to replace and repair...
CAT Construction has been awarded a contract with the City of Newberg to replace and repair all of the sidewalks in the older residential areas. Based on experience with previous​ projects, CAT feels the project completion time follows a normal distribution with a mean of 60 days and a standard deviation of 10 days. CAT anticipates the net profit for completing the project is​ $100,000. If the company completes the project is less than 40​ days, it will receive an...
A new waste treatment plant has been planned to replace an existing small aging plant for...
A new waste treatment plant has been planned to replace an existing small aging plant for your home town. Discuss the MOEs for (i)the overall system, (ii)each phase of the overall system development,and (iii)the operations phase of any of the plant’s processes.
A trucking company has been requested to quote a realistic turn-around time for a contract to...
A trucking company has been requested to quote a realistic turn-around time for a contract to handle the distribution of a certain product to supermarkets around the country. The company provided the following turn-around times for distributing similar goods over a given twelve month period. Turn-around times in days Frequency Less than 2 days 25 2 but less than 4 days 36 4 but less than 6 days 66 6 but less than 8 days 47 8 but less than...
Your company has been awarded a contract for 5-story addition on top of an existing 10-story...
Your company has been awarded a contract for 5-story addition on top of an existing 10-story hospital tower at a Cancer Center located in one of the most populated areas of Dallas, Texas. The existing hospital building is beyond 100% occupancy. The company was hired under a design-build contract to complete the $220 million project. Wind-load testing will be conducted. The wind-resisting system will be modified to redistribute loads on the mat foundation. High-strength concrete will be utilized for the...
1) As Sommerville describes, social contract theory has been around since the time of the Greeks,...
1) As Sommerville describes, social contract theory has been around since the time of the Greeks, but it really becomes important in the sixteenth, seventeenth, and eighteenth centuries during the political and religious wars of that period. According to Johann Sommerville, how is it that the idea of the social contract gives rise to the idea of just revolution against established authority (right to revolt)? Describe how Hobbes and Locke establish this right to revolt (use quotations).
There are 2 basic types of contracts: the fixed-price contract and the cost-plus contract. Each has...
There are 2 basic types of contracts: the fixed-price contract and the cost-plus contract. Each has several common variations. It is not unusual for any specific contract to have special terms and agreements, so the basic contract is just the starting point. The project manager is most interested in the terms that define and help to control costs, schedule, and quality. Among the different types of contracts, which contracts do you think would be easiest for ADC to manage, and...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT