cost
amount of money sacrficed for goods to bring a current or future cashflow into the orginisation
costs that expire are
expenses
direct costs
every cost can be luiked to a product or service
indirect cost
not easily tracked, also called overhead
more accurate costs means
more work, so is it worth it
example indirect materials for house building
hammers tools etc
receptionists-indirect labour. -management
overheads seperated into
manufacturing ovehead, administrative expenses, selling expenses
fixed, variable, mixed costs
fixed doesnt change when output increases, variable obvs changes with outp, mixed has variable and fixed components
how to find hourly cost
take last years over head, take last years acrtivities, find predtermined overhead by dividing .
three types of accounting
financial, management, cost
financial accounting
produce financial staements that convey info to outsiders
managment accounting
-info for operation
cost accounting
-expenses are allocated to products.
not all expenditures are expenses
- corrections are made like pre paid expenses( expenditure for another year)
- long lived assers are not in full as expenses for the period . depreciation.
costing methods
process costing-assigns average costs to each unit of production.
job order costing-differentiates the direct costs per job to see how profitable ach one is
activity based costing-percentage of overhead assigned to a job
find costing example
.
best accuracy for cost estimates?
5%
indicies used for conceptual estimate
cost indices
loacation index
give average cost per standard unit
different estimate classes
conceptual estimate
engineering estimate(1-3)
contractor detailed estimate
expected accuracy for these classes
- 25-+50
- 20 +40
- 15-+25
- 10-+15
- 5-+10
at 30-40% design finnish
- many critical decisions known, like footprinjt, major equipment etc
- first engineering estimate foundation
60% finsiedh design
foundation for second engineering estimate
-verify systems meet needs
-use more precuise quantitires and quality requirements
review drawings by construction specialists
90%finnished
complete set of bid documents
last chance review
wil be sent to authorites for r3eview
accuracy factors effect qunatity and cost of three
construction materials
labour
equipment
h0w much does labour contribute to construciton costs
30-50%
total cost of labour and total work hour equations
cost=work hours*wage rate
workhours= quantity of work/productivity rate
two eamples each of external and internal factors effectng productivty
internal, management, work conditions
external, market, environmental conditions.
what is a contingencie
amount of money added to an estimate to cover unforeseen needs
three componenets (from figure) that make up estimated bid price
direct cost, job site overhead, markup
what does markup component consist of?
main office allocated cost, contingiency and risk, expected profit.
