18. (36 points) Inspired by cutting pieces of wood while you were a child, you have decided to

start a new wood formwork installation company called "IAMWOOD" (IAW). For this

purpose, you made the following forecast, decisions, investments, and cost assumptions:

To comply with "industry practices", IAW considers its Indirect Project Overhead

Cost (PoOH) as a Direct Cost (and calls it "General Conditions").

According to your market evaluation, during the first year of operations (12 month

period) IAW will have an average of 10 projects per month, each project will be bid

(priced and charged to the client) at an average of $2,500/per project.

IAW yearly office expenses with the exception of office salaries (i.e., all utilities,

equipment, insurance, phone/fax, etc) will total only $8,000/yr since IAW

headquarters will be located in your mom's garage.

IAW will have a total of 5 employees (all costs noted below already include the

corresponding labor burden):

o Your sister Emily, making $17,000/year (in salary) will manage the office

and keep the accounting books.

o Yourself, making $20,000/year (in salary), will work 25% of the time as the

assistant office business manager and 75% of the time in the field as a

project supervisor. The "field" (supervision) portion of your salary will be

charged to clients at $64/day (you plan to typically supervise field work @

75% of your time, for about 235 days/year).

o Your field workers, composed by Robbie Nails, Robert Lumber, and

Robertito Hummer; each of these laborers are hourly employed at $8/hr;

you estimate that at the end of the year each of these field employees will

make approximately $15,000/yr. These field workers will work about 235

days/year, so you plan to charge clients $64/day. Note: the field crew can

conservatively (i.e., including potential productivity losses) install about

1,000sf of formwork per each working day, working 8 hours a day.

IAW will pay for all costs associated with Emily's 1975 Saab, in a year this cost will

be $3,000.

IAW has decided to pay for the yearly costs (ownership + operational) of your old

black Ford F150 (you call it the "black wolf") and for your cell phone, together

totaling $5,000/yr. These two items have NOT been included part of your own

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labor burden, therefore these need to be charged to clients as applicable. You plan

to use these two items (car and phone) to perform both your work duties as an

assistant office manager and as a field supervisor. The "field" portion

corresponding to these two items will be charged to clients at $16/day.

IAW will pay for the following items to cover the first year of project construction

costs:

o Materials, such as lumber, plywood, and nails for a total cost of $160,000

(you plan to charge clients for this material at a rate of $2.5/sf of installed

formwork area).

o Equipment, such as large electric saws for a total cost of $10,000 (you plan

to charge clients for this equipment at a rate of $0.5/sf of installed

formwork area).

o Subcontractors, such as the cost of scaffolding subcontractors hired during

the year will be approximately $20,000. (you plan to charge clients for this

work at a rate of $1.0/sf of installed formwork area).

o Additionally, IAW will have other yearly construction costs such as:

A small metallic container with windows, to be used as a field

office, with a total cost of $3,000/yr (you plan to charge clients for

this item at a rate of $13/day).

Temporary sanitary facilities for a total cost of $2,000/yr (you plan

to charge clients for these items at a rate of $9/day).

Please SHOW all your work and write the final answer in the space provided after the

answers summary section

a. (2 points) What would be IAW's yearly Sales Revenue

(in $)_____________________________

b. (4 points) What would be IAW's yearly PoOH, also called "General Conditions"

(in $)____________________________________

c. (4 points) What would be IAW's Yearly Direct Costs? (in $), make sure your

calculation here is consistent with how IAW treats "General Conditions"

(in $)_____________________________________

d. (4 points) What is IAW's Yearly Indirect Costs? (in $), again, make sure your

calculation here is consistent with how IAW treats "General Conditions"

(in $)______________________________________

(as a % of Direct Cost)_________________________

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e. (4 points) What would be IAW's estimated Profit and Contingency (lump these

two together) for the Year? (In $ and as % of Direct Cost)

(in $)______________________________________

(as a % of Direct Cost)________________________

f. (2 points) What would be IAW's MARKUP for the Year? (In $ and as % of Direct

Cost). Again, make sure your calculation here is consistent with how IAW treats

"General Conditions"

(in $)______________________________________

(as a % of Direct Cost)________________________

g. (10 points) Assume that IAW is bidding for a new project that will require the

installation of 20,000 sf of formwork for a large retaining wall (waste already

included). Based on the information provided previously for IAW, prepare a bid

for this work (i.e., indicate the amount of money in $'s you plan to charge your

client for this work)

(Your BID in $)_______________________________

h. (4 points) For this crew and for this project, excluding you (you are a supervisor),

how many LABOR HOURS would it take to complete one (1) SF of formwork?

(in LH/SF)_______________________________