Construction Accounting And Financial Management (4th Edition)
4th Edition
ISBN: 9780135232873
Author: Steven J. Peterson MBA PE
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 18P
To determine
Ascertain the changes to be made in the accounting system of the company.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
You have been doing a good business at your auto service & repair shop. Business is brisk! You have decided that, rather
than just blowing your profits on a big party, to invest in a way to grow your business and - you hope -- bring in even
more profits later. You have been working 50 hours per week at the shop but haven't taken any pay yet. You have money
left to divide between your wage, and money to invest in growing your business. The more wages you pay yourself the
less you will have to invest in your shop.
> Weekly, you have been selling 30 brake replacements ($300 each), and 100 oil changes ($80 each).
> Labor costs, have been about $4,400 per week:
Technicians: $1,200 each
Porter: $620
Service Writer: $800
Cashier: $580
> Supplies & parts cost you $3,400 per week
> Rent & utilities for your shop is $5,000 per week
> Insurance is $1,200 per week
Show your work & circle your answer:
6. Calculate your total weekly revenue.
7. Calculate your weekly profit.
8. Determine your own…
The manager at the Overton Hotel in Lubbock believes that the success of the Texas Tech Red Raider Basketball team has an impact on the occupancy rate at the hotel during
the first quarter of every year. Below are the number of victories for the Red Raiders in during the last three seasons and the hotel occupancy rate. This year, (year 4) the Red
Raiders Basketball Team is expected to win 28 games and the manager at the Overton has asked you to determine their first quarter occupancy rate for the upcoming year (year
4) using associative forecasting.
Year Wins First Quarter Occupancy Rate
1
25
2
3
27
31
88.32%
91.25%
Ⓒ90.29%
Ⓒ86.36%
92.21%
80%
90%
93%
Doug Washington, the owner of Coyote Printing, is evaluating a printing company in Texas. Stan College, the company's CFO, has just finished his analysis of company. He has estimated that the printing company would be productive for eight years, during which the market would be completely diminished. Stan has taken an estimate of the balance statement and forecast to Hattie May, the company's financial officer. Hattie has been asked by Doug to perform an analysis of the printing company and present her recommendation on whether the company should open the take over the printing company. Hattie May has used the estimates provided by Stan to determine the revenues that could be expected from the printing company. She has also projected the expense of taking over the printing company and the annual operating expenses. If the company takes over the printing company, it will cost $700 million today, and it will have a cash outflow of $75 million nine years from today in costs associated…
Chapter 7 Solutions
Construction Accounting And Financial Management (4th Edition)
Ch. 7 - What are the key steps in the monitoring and...Ch. 7 - What does it indicate when a superintendent has to...Ch. 7 - What is the best way to control labor costs? What...Ch. 7 - Why are equipment costs for company-owned...Ch. 7 - What is an internai change order and how is it...Ch. 7 - Why is it important to have a realistic budget for...Ch. 7 - What are some of the problems with using the CPI?Ch. 7 - Prob. 8DQCh. 7 - During the design phase, what are the steps for...Ch. 7 - Determine the estimated cost of the work performed...
Ch. 7 - Determine the estimated cost of the work performed...Ch. 7 - A project consists of three tasks. Task A is...Ch. 7 - A project consists of six tasks. Task A is...Ch. 7 - The ACWP at the end of the second week for the...Ch. 7 - A project consists of six tasks. Task A is...Ch. 7 - Determine the total estimated cost at completion...Ch. 7 - A project consists of six tasks. Task A is...Ch. 7 - Prob. 18P
Knowledge Booster
Similar questions
- Lorenzo, the owner of a local poster shop, comes to you for help. While his shop has been breaking even for the past two years, it has not been able to generate a profit. For him to keep the shop open, he needs to earn at least $12,000 in operating income next year. You agree to help Lorenzo and ask him for some current information about his products' selling price and costs. You tell him you will work through some possible scenarios that might involve changing his sales price to generate the number of units sold needed to reach his target profit. Lorenzo shares the following information with you as you ponder different scenarios to help your client. Selling price $7.50 Cost for paper, per unit $0.70 Cost for printing, per unit $1.10 Cost for film, per unit $0.60 Staff salaries $48,000.00 Other operating costs $12,120.00 Using Lorenzo's data and proper Excel formulas, first, plan to get an understanding of Lorenzo's financial situation based on breakeven. Then look at…arrow_forwardProfessional cuddling therapy is a growing industry. You think you might be really good at cuddling so you decide to open a cuddle therapy business. Setting up the business will cost $14,000. Your business will be an all cash business so net income will be equal to your cash flows. You expect to earn $3,000 in net income in your first year of business and $4,000 in net income in the second year. In your third year you will sell the business for $15,000. These are all the cash flows associated with your cuddling business. The cost of capital is 15%. What is the NPV of this project? What is the IRR?arrow_forwardhe President of Tesla was really impressed by your analysis on market reactions and wants more (of course, he’ll pay you more!). He recently told his management team to do some research and find a fix for the autopilot system and analyze any option for a minimum five-year period. The management team has found a company that can provide an improved computer. With this improvement, the management team believes the company’s revenues will increase in the first year by $25 million, increase by $7 million in the second year, then increase by $2 million per year each in years three, four and five. The charge for the improved capability will cost Tesla $100 million (including license fee) in the first year, with a flat license and maintenance fee of $10 million in years two through five. The team accounted for inflation in their figures and is very confident of the estimated costs and revenue. The President wants you to look at these figures and advise him on a decision. Assume that…arrow_forward
- Mr. Kevin Dates is the owner of an expanding business operating in bakery industry located in Bridgetown, Barbados. Over the last few years business has been great. However, he believes it is time to grow and be more profitable. As such Mr. Dates has decided to invest in a new sophisticated convection oven that would boost production levels by 400% in a more efficient manner. As an astute assistant manager to Mr. Dates have asked you to analyze the following variables to assist in informing the correct decision:1. Mr. Dates is considering investing in one of two convection ovens - Type ABC and Type XYZ;2. The initial investment costs of ovens Type ABC and Type XYZ are both $115,000 each;3. Over a 5 year period directly following the investment, projected revenue attributed to the Type ABC oven is $72,000 a year. While projected expenditure is $42,000 a year for the Type ABCoven;4. This is not the same for the Type XYZ oven investment, which is projected to only have revenue and…arrow_forwardTesselek Technology, Inc., is a relatively new company and has been operating for only the past five years. It was set up by two leading scientists Mr. Tess and Mr. Lek. The company is involved in the development of high speed electric cars which are in high demand. The company has enjoyed very rapid growth and equally high profitability. Although the company has employed an excellent group of well competent employees, its overall future development plans were highly dependent on the two senior scientists. On November 3, 2020, the two scientists had an accident in a race to test their new car model. Both were killed in that accident and now, the company's future plans have come to a near dead stop. The stock market answered badly to this news, the company stock price had dropped nearly by 70% and the remaining members of the Board of Directors have instructed the CFO to account for this loss of market value estimated at between $350M-$500M ( probability is equally distributed) as a…arrow_forwardTesselek Technology, Inc., is a relatively new company and has been operating for only the past five years. It was set up by two leading scientists Mr. Tess and Mr. Lek. The company is involved in the development of high speed electric cars which are in high demand. The company has enjoyed very rapid growth and equally high profitability. Although the company has employed an excellent group of well competent employees, its overall future development plans were highly dependent on the two senior scientists. On November 3, 2020, the two scientists had an accident in a race to test their new car model. Both were killed in that accident and now, the company's future plans have come to a near dead stop. The stock market answered badly to this news, the company stock price had dropped nearly by 70% and the remaining members of the Board of Directors have instructed the CFO to account for this loss of market value estimated at between $350M-$500M ( probability is equally distributed) as a…arrow_forward
- A famous skateboarder is planning on opening a new indoor skateboard facility in Athens. He wants to name the skate park “Accounting Central” because a lot of accountants are skaters as well. Accounting Central will us a membership model to generate revenue, allowing customers to purchase a monthly membership and gain unlimited access to the park. When operating, Accounting Central is estimated to have $650,000 in assets. Shareholders are anticipating receiving a 15% return on the assets as operating income. The facility’s annual fixed costs are expected to be $96,000. The variable costs per skater are estimated to be $15 per month. After analyzing the market, Accounting Central believes it can sell 150 memberships in the first month. Furthermore, the company has noted that a number of other skaters have started similar skate-parks in the area, leading to high competition in the area. Which of the following statements is incorrect regarding the company’s first month of…arrow_forwardBoswell Manufacturing Company has been in business for five years. Thecompany has now decided to expand its operations. To finance this process, the company is considering two approaches: (1) Lease the assets that are needed on a long term basis or (2) Issue bonds and use the proceeds to purchase the assets. The CEO is seeking your advice on the matter. Without knowledge of the comparative cost involved, how would you advise him in the following questions: (i) What might be the advantages and disadvantages of leasing the assetsinstead of owning them. (List at least three advantages and threedisadvantages) (ii) How will leasing the assets instead of owning them affect the financialstatements?arrow_forwardThe new chief executive officer (CEO) of Richard Manufacturing has asked for a variety of information about the operations of the firm from last year. The CEO is given the following information, but with some data missing: (Click the icon to view the variety of operations information.) Read the requirements, Requirement 1. Find (a) total sales revenue, (b) selling price, (c) rate of return on investment, and (d) markup percentage on full cost for this product. (a) The total sales revenue is (Round your answer to the nearest cent.) (b) The selling price per unit is (Round the retum on investment to the nearest whole percent, X%.) (c) The rate of return on investment is (d) Calculate the markup percentage on full cost for this product. (Round your intermediary calculations to the nearest cent and the markup to the nearest hundredth percent XXX%) The markup percentage on full cost for this product is Requirement 2. The new CEO has a plan to reduce fixed costs by $200,000 and variable…arrow_forward
- You are an employee of University Consultants, Limited, and have been given the following assignment. You are to present an investment analysis of a small retail income-producing property for sale to a potential investor. The asking price for the property is $1,350,000; rents are estimated at $172,800 during the first year and are expected to grow at 2.5 percent per year thereafter. Vacancies and collection losses are expected to be 10 percent of rents. Operating expenses will be 35 percent of effective gross income. A fully amortizing 70 percent loan can be obtained at 7 percent interest for 30 years (total annual payments will be monthly payments × 12). The property is expected to appreciate in value at 3 percent per year and is expected to be owned for five years and then sold. Required: a. What is the first-year debt coverage ratio? b. What is the terminal capitalization rate? c. What is the investor’s expected before-tax internal rate of return on equity invested (BTIRR)? d.…arrow_forwardYou are an employee of University Consultants, Limited, and have been given the following assignment. You are to present an investment analysis of a small retail income-producing property for sale to a potential investor. The asking price for the property is $1,400,000; rents are estimated at $179,200 during the first year and are expected to grow at 2.5 percent per year thereafter. Vacancies and collection losses are expected to be 10 percent of rents. Operating expenses will be 35 percent of effective gross income. A fully amortizing 70 percent loan can be obtained at 8 percent interest for 30 years (total annual payments will be monthly payments 12). The property is expected to appreciate in value at 3 percent per year and is expected to be owned for five years and then sold. Required: a. What is the first-year debt coverage ratio? b. What is the terminal capitalization rate? c. What is the investor's expected before-tax internal rate of return on equity invested (BTIRR)? d. What is…arrow_forwardYou are the Vice President for Operations at Taqueria Auténtica, an authentic Mexican taco restaurant expanding quickly throughout Texas. The company wants to invest in corporate owned chains for five years, prove the market concepts, and then sell them off as franchises after they have demonstrated proof of concept to potential owners. You have spent some time looking at potential locations in Granbury and Stephenville. Based on the specific locations the start-up costs would be $671,258 for Granbury, and $883.695 for Stephenville. The business risk at each location would be similar to risks at the overall corporation, and should require a weighted average cost of capital of 7.12%. The investment in one location does not affect the ability of the company to invest at the other location in any way. Calculate the net present value of both projects, and enter in the box below how much the value of the firm is expected to increase based on this capital budget (please enter the amount to…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College