Cedar Creek Gold, Inc. is interested in the construction of a mass storage building for truck spare parts, core drills and miscellaneous supplies.

After discussing the project with a local contractor, they receive an estimate that the total construction cost of the 2,000 ft² building will be $150,000. Costs within each category include labor, material, and overhead items. The percentage of costs for each of several items (categories) is broken down as follows:             

Cost Items                                                                                 Percentage of

                                                                                                     Total Costs

                                                                                                                   (%)

Construction permits, legal and title fees                                          8          

Roadway, site clearing, preparation                                                   15         

Foundation, concrete, masonry                                                           13         

Wallboard, flooring, carpentry                                                             12         

Heating, ventilation, air conditioning                                                  13         

Electric, plumbing, communications, surveillance                           10         

Roofing, flooring                                                                                     12         

Painting, finishing                                                                                   17

                                                                                                           ________

                                                                                                               100         

a) What is the cost per square foot of the 2,000 ft² storage building?

b) If you are also considering a 4,000 ft² layout option, estimate your construction costs if:

              i. All cost items (in the table) change proportionally to the size increase.

              ii. The first two cost items do not change at all; all others are proportionate.

Please advise on both of tendering method and contractual arrangement for the construction of a 5-Star Hotel in Tung Chung new town. Since the proposed project is to be a major development, the Client is anxious on the cost aspects.

The Client wishes to have indication of the amount of investment before signing the formal contract with the selected contractor and he is also concerned on the cost-control aspect. He also intends to commence the work at a reasonable time.

Suggest to the client with reasons, for choosing both of the most appropriate tendering method and contractual arrangement for this particular project for client’s consideration.

The City of Little River had the following transactions related to the construction of a new courthouse:

1. January 2, 2017: 20-year, 6%, general-obligation serial bonds with a face value of $2,000,000 are issued at 101. Interest payments are made on January 1 and July 1 of each year. The premium was transferred into the debt-service fund. The general fund will fully fund each payment as it becomes due.
2. March 1, 2017: Land is purchased for a new park at a cost of $200,000.
3. March 1, 2017: A contract is signed for landscaping and construction of various structures in the park in the amount of $1,800,000.
4. June 15, 2017: $110,000 is transferred from the general fund for the July 1 payment due on the courthouse-fund serial bonds.
5. July 1, 2017: Interest ($60,000) and principal ($50,000) are paid on the courthouse-fund serial bonds.
6. December 1, 2017: The city receives an invoice for progress completed to date on the courthouse construction project in the amount of $385,000.
7. December 27, 2017: $58,500 is transferred from the general fund for the January 1, 2018 interest payment due on the courthouse-fund serial bonds.
8. Interest is accrued as of December 31, 2017, following the exception permitted by the GASB.

Prepare the journal entries required in both the capital-projects fund and the debt-service fund using the template provided in this module.

Suppose a group of volunteers is planning on building a park near a local lake. The lake is known to contain low levels of arsenic (As). Therefore, prior to starting construction, the group decides to measure the current level of arsenic in the lake.

a) If a 15.7 cm3 sample of lake water is found to have 164.5 ng As, what is the concentration of arsenic in the sample in parts per billion (ppb), assuming that the density of the lake water is 1.00 g/cm3?

One of the volunteers suggests hiring an on-site water treatment company to remove the arsenic from the lake. The company claims their process takes 2.74 days to remove 41.90 kg of As from a water source.

b) Calculate the total mass (in kg) of arsenic in the lake that the company will have to remove if the total volume of water in the lake is 0.710 km3?

c) Based on the company\'s claim and the concentration of arsenic in the lake, how many years will it take to remove all of the arsenic from the lake, assuming that there are always 365 days in a year?

Suppose a group of volunteers is planning on building a park near a local lake. The lake is known to contain low levels of arsenic (As). Therefore, prior to starting construction, the group decides to measure the current level of arsenic in the lake.

a) If a 15.7 cm3 sample of lake water is found to have 164.5 ng As, what is the concentration of arsenic in the sample in parts per billion (ppb), assuming that the density of the lake water is 1.00 g/cm3?

One of the volunteers suggests hiring an on-site water treatment company to remove the arsenic from the lake. The company claims their process takes 2.74 days to remove 41.90 kg of As from a water source.

b) Calculate the total mass (in kg) of arsenic in the lake that the company will have to remove if the total volume of water in the lake is 0.710 km3?

c) Based on the company\'s claim and the concentration of arsenic in the lake, how many years will it take to remove all of the arsenic from the lake, assuming that there are always 365 days in a year?

Sweet Construction Company began operations on January 1, 2020. During the year, Sweet Construction entered into a contract with Lundquist Corp. to construct a manufacturing facility. At that time, Sweet estimated that it would take 5 years to complete the facility at a total cost of $4,517,000. The total contract price for construction of the facility is $6,047,000. During the year, Sweet incurred $1,067,800 in construction costs related to the construction project. The estimated cost to complete the contract is $4,271,200. Lundquist Corp. was billed and paid 25% of the contract price. Prepare schedules to compute the amount of gross profit to be recognized for the year ended December 31, 2020, and the amount to be shown as “costs and recognized profit in excess of billings” or “billings in excess of costs and recognized profit” at December 31, 2020, under each of the following methods.

(a) Completed-contract method.

1.Gross Profit to be recognize

2.Computation of Billings on Uncompleted Contract in Excess of
Related Costs under Completed-Contract Method

(b) Percentage-of-completion method.

Integrative Exercise
Cost Behavior and Cost-Volume-Profit Analysis for Many Glacier Hotel

Using the High-Low Method to Estimate Variable and Fixed Costs

Located on Swiftcurrent Lake in Glacier National Park, Many Glacier Hotel was built in 1915 by the Great Northern Railway. In an effort to supplement its lodging revenue, the hotel decided in 20X1 to begin manufacturing and selling small wooden canoes decorated with symbols hand painted by Native Americans living near the park. Due to the great success of the canoes, the hotel began manufacturing and selling paddles as well in 20X3. Many hotel guests purchase a canoe and paddles for use in self-guided tours of Swiftcurrent Lake. Because production of the two products began in different years, the canoes and paddles are produced in separate production facilities and employ different laborers. Each canoe sells for $500, and each paddle sells for $50. A 20X3 fire destroyed the hotel’s accounting records. However, a new system put into place before the 20X4 season provides the following aggregated data for the hotel’s canoe and paddle manufacturing and marketing activities:

Required:

1. High-Low Cost Estimation Method

a. Use the high-low method to estimate the per-unit variable costs and total fixed costs for the canoe product line.

b. Use the high-low method to estimate the per-unit variable costs and total fixed costs for the paddle product line.

2. Cost-Volume-Profit Analysis, Single-Product Setting
Use CVP analysis to calculate the break-even point in units for

a. The canoe product line only (i.e., single-product setting)

b. The paddle product line only (i.e., single-product setting)

3. Cost-Volume-Profit Analysis, Multiple-Product Setting

The hotel's accounting system data show an average sales mix of approximately 300 canoes and 1,200 paddles each season. Significantly more paddles are sold relative to canoes because some inexperienced canoe guests accidentally break one or more paddles, while other guests purchase additional paddles as presents for friends and relatives. In addition, for this multiple-product CVP analysis, assume the existence of an additional $30,000 of common fixed costs for a customer service hotline used for both canoe and paddle customers. Use CVP analysis to calculate the break-even point in units for both the canoe and paddle product lines combined (i.e., the multiple-product setting).

4. Cost Classification

a. Classify the manufacturing costs, marketing costs, and customer service hotline costs either as production costs or period costs.

All manufacturing costs are costs. All marketing costs and customer hotline costs are costs

b. For the period costs, further classify them into either selling expenses or general and administrative expenses.

Marketing costs are selling oriented; therefore, the marketing period costs would be further classified as . Customer hotline costs relate to the customer service section of the value chain and would be further classified as .

5. Sensitivity Cost-Volume-Profit Analysis and Production Versus Period Costs, Multiple- Product Setting

If both the variable and fixed production costs (refer to your answer to Requirement 1) associated with the canoe product line increased by 5% (beyond the estimate from the high-low analysis), how many canoes and paddles would need to be sold in order to earn a target income of $96,000? Assume the same sales mix and additional fixed costs as in Requirement 3.

6. Margin of Safety

Calculate the hotel’s margin of safety (both in units and in sales dollars) for Many Glacier Hotel, assuming the same facts as in Requirement 3, and assuming that it sells 700 canoes and 2,500 paddles next year.
total MOS units above total BE units

$ MOS in sales dollars

Cost Behavior and Cost-Volume-Profit Analysis for Many Glacier Hotel

Using the High-Low Method to Estimate Variable and Fixed Costs

Located on Swiftcurrent Lake in Glacier National Park, Many Glacier Hotel was built in 1915 by the Great Northern Railway. In an effort to supplement its lodging revenue, the hotel decided in 20X1 to begin manufacturing and selling small wooden canoes decorated with symbols hand painted by Native Americans living near the park. Due to the great success of the canoes, the hotel began manufacturing and selling paddles as well in 20X3. Many hotel guests purchase a canoe and paddles for use in self-guided tours of Swiftcurrent Lake. Because production of the two products began in different years, the canoes and paddles are produced in separate production facilities and employ different laborers. Each canoe sells for $500, and each paddle sells for $50. A 20X3 fire destroyed the hotel’s accounting records. However, a new system put into place before the 20X4 season provides the following aggregated data for the hotel’s canoe and paddle manufacturing and marketing activities:

Required:

1. High-Low Cost Estimation Method

a. Use the high-low method to estimate the per-unit variable costs and total fixed costs for the canoe product line.

b. Use the high-low method to estimate the per-unit variable costs and total fixed costs for the paddle product line.

2. Cost-Volume-Profit Analysis, Single-Product Setting
Use CVP analysis to calculate the break-even point in units for

a. The canoe product line only (i.e., single-product setting)

b. The paddle product line only (i.e., single-product setting)

3. Cost-Volume-Profit Analysis, Multiple-Product Setting

The hotel's accounting system data show an average sales mix of approximately 300 canoes and 1,200 paddles each season. Significantly more paddles are sold relative to canoes because some inexperienced canoe guests accidentally break one or more paddles, while other guests purchase additional paddles as presents for friends and relatives. In addition, for this multiple-product CVP analysis, assume the existence of an additional $30,000 of common fixed costs for a customer service hotline used for both canoe and paddle customers. Use CVP analysis to calculate the break-even point in units for both the canoe and paddle product lines combined (i.e., the multiple-product setting).

4. Cost Classification

a. Classify the manufacturing costs, marketing costs, and customer service hotline costs either as production costs or period costs.

All manufacturing costs are product  costs. All marketing costs and customer hotline costs are period  costs

b. For the period costs, further classify them into either selling expenses or general and administrative expenses.

Marketing costs are selling oriented; therefore, the marketing period costs would be further classified as selling expenses . Customer hotline costs relate to the customer service section of the value chain and would be further classified as general and administrative expense .

5. Sensitivity Cost-Volume-Profit Analysis and Production Versus Period Costs, Multiple- Product Setting

If both the variable and fixed production costs (refer to your answer to Requirement 1) associated with the canoe product line increased by 5% (beyond the estimate from the high-low analysis), how many canoes and paddles would need to be sold in order to earn a target income of $96,000? Assume the same sales mix and additional fixed costs as in Requirement 3.

6. Margin of Safety

Calculate the hotel’s margin of safety (both in units and in sales dollars) for Many Glacier Hotel, assuming the same facts as in Requirement 3, and assuming that it sells 700 canoes and 2,500 paddles next year.
total MOS units above total BE units

$ MOS in sales dollars

Prepare Governmental Activities Journal:

Riverside began work on an outdoor amphitheater and concession stand at the city's park. It is to be financed by a $3,500,000 bond issue and supplemented by a $500,000 General Fund transfer. The following transactions occurred in 2017:

1. The General Fund transferred $500,000 to the Park Building Capital Projects Fund.

2. A contract was signed with Restin Construction Company for the major part of the project on a bid of $2,700,000.

3. Preliminary planning and engineering costs of $69,000 were vouchered for the Great Pacific Engineering Company. (This cost had not been encumbered.)

4. A payable was recorded for an $18,500 billing from the Water and Sewer enterprise fund for the cost of extending water pipes to the new concession stand.

5. An invoice in the amount of $1,000,000 was received from Restin for progress to date on the project.

6. The $3,500,000 bonds were issued at par.

7. The amount billed by the contractor (see Transaction 5) less 5 percent retainage was paid.

8. Temporary investments were purchased at a cost of $1,800,000.

Please prepare Governmental Activities Journal, not General Fund.

Riverside began work on an outdoor amphitheater and concession stand at the city's park. It is to be financed by a $3,500,000 bond issue and supplemented by a $500,000 General Fund transfer. The following transactions occurred in 2017:

1. The General Fund transferred $500,000 to the Park Building Capital Projects Fund.

2. A contract was signed with Restin Construction Company for the major part of the project on a bid of $2,700,000.

3. Preliminary planning and engineering costs of $69,000 were vouchered for the Great Pacific Engineering Company. (This cost had not been encumbered.)

4. A payable was recorded for an $18,500 billing from the Water and Sewer enterprise fund for the cost of extending water pipes to the new concession stand.

5. An invoice in the amount of $1,000,000 was received from Restin for progress to date on the project.

6. The $3,500,000 bonds were issued at par.

7. The amount billed by the contractor (see Transaction 5) less 5 percent retainage was paid.

8. Temporary investments were purchased at a cost of $1,800,000.