Question
A construction company reviews its material, labor, and overhead costs for six projects. Project Units Produced Material Cost Cost per Unit (Material) Labor Cost Cost
A construction company reviews its material, labor, and overhead costs for six projects.
| Project | Units Produced | Material Cost | Cost per Unit (Material) | Labor Cost | Cost per Unit (Labor) | Overhead Cost | Cost per Unit (Overhead) |
|---|---|---|---|---|---|---|---|
| 1 | 10 | $20,000 | $25,000 | $10,000 | |||
| 2 | 20 | $40,000 | $50,000 | $20,000 | |||
| 3 | 5 | $10,000 | $12,500 | $5,000 | |||
| 4 | 15 | $30,000 | $37,500 | $15,000 | |||
| 5 | 25 | $50,000 | $62,500 | $25,000 | |||
| 6 | 7 | $14,000 | $17,500 | $7,000 |
Required: a. Calculate the cost per unit for each cost. b. Classify each cost as fixed, variable, or mixed. c. Discuss the impact of these cost behaviors on project budgeting. d. Evaluate the effect of cost behavior on construction project profitability. e. Propose cost management strategies for material, labor, and overhead costs.
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Accounting Information Systems
Authors: Marshall B. Romney, Paul J. Steinbart
12th edition
132552620, 978-0132552622
