Number 16 is the one to be solved
only number 16
ber 16
truction accounting systems. th costs from the job cost ledger. This will help you unde stand how to include committed costs and how an accour ing package handles committed costs, since it handles the in a similar manner. hat follows are a number of topics that will round out your understanding of construction ac- counting. Let's begin by looking at committed We also look at projecting the estimated cost at compl tion. As a project is completed, estimated costs become actu costs. As cost over- and underruns occur on projects, th estimated cost at completion, as well as the estimated profi changes for each of the projects. Additionally, as chang orders occur, they further change the estimated cost a completion and profit. It is important for management t and estimated cost at completion. OMMITTED COSTS AND STIMATED COST AT OMPLETION track and manage the profitability of each project. Including committed costs and estimating the cost a completion can be done with a simple spreadsheet similar to get a more accurate picture of a construction project's the one shown in Figure 4-1. Each project is done on a sepa ancial status, unbilled committed costs must be included rate spreadsheet. Let's look at how to use this spreadsheet to h the invoiced costs in the job cost ledger and the esti include the committed costs and project the cost at comple- ted cost at completion needs to be projected. tion for a project. Each cost code is entered on a separate line. The cost mmitted to pay. These costs may or may not be recorded codes may or may not be separated by cost type-labor, ma- an expense. This occurs when the company issues a pur- terials, equipment, subcontract, and other. The cost codes ase order or signs a subcontract for a known amount. are entered in Column A with the associated description en- ften a company hires subcontractors for a major portion tered in Column B. The original estimated cost for each cost Committed costs are those costs that the company has Tota Total Non and Non Estimated Variance K-E) Costs Invoiced Code FIGURE 4-1 Committed Cost Worksheet 51 truction accounting systems. th costs from the job cost ledger. This will help you unde stand how to include committed costs and how an accour ing package handles committed costs, since it handles the in a similar manner. hat follows are a number of topics that will round out your understanding of construction ac- counting. Let's begin by looking at committed We also look at projecting the estimated cost at compl tion. As a project is completed, estimated costs become actu costs. As cost over- and underruns occur on projects, th estimated cost at completion, as well as the estimated profi changes for each of the projects. Additionally, as chang orders occur, they further change the estimated cost a completion and profit. It is important for management t and estimated cost at completion. OMMITTED COSTS AND STIMATED COST AT OMPLETION track and manage the profitability of each project. Including committed costs and estimating the cost a completion can be done with a simple spreadsheet similar to get a more accurate picture of a construction project's the one shown in Figure 4-1. Each project is done on a sepa ancial status, unbilled committed costs must be included rate spreadsheet. Let's look at how to use this spreadsheet to h the invoiced costs in the job cost ledger and the esti include the committed costs and project the cost at comple- ted cost at completion needs to be projected. tion for a project. Each cost code is entered on a separate line. The cost mmitted to pay. These costs may or may not be recorded codes may or may not be separated by cost type-labor, ma- an expense. This occurs when the company issues a pur- terials, equipment, subcontract, and other. The cost codes ase order or signs a subcontract for a known amount. are entered in Column A with the associated description en- ften a company hires subcontractors for a major portion tered in Column B. The original estimated cost for each cost Committed costs are those costs that the company has Tota Total Non and Non Estimated Variance K-E) Costs Invoiced Code FIGURE 4-1 Committed Cost Worksheet 51
