Problem number 8

Backup and Recovery Procedures: The allow for easy backup and recovery in thstens of data due to virus, hardware failu CHAPTER FOUR ble to a construction company and duplcen is to be maintained and stored in a Backups should be done on a daily and w Customization: The software should create custom reports without havi tem to ata in the accounting syst projects or make changes in the accounting nt Data-entry personnel should be able to enter data in projects that they have been granted access to. the Integration of Modules: The modules should be inte. grated in such a way that they do not require modify the hich allows the user to create cus rts-and a means of exporting dat entered separately in different modules. An example you to bill an employee's truck to the jobs at the same time you bill the employee's hours, thus reducing the take a separate step to allocate the truck's spread. the contractor at a cost of $27,365. The original for the water line was $31,000 and no cha estimate made to the budget. The costs to date fbe are $31,300 and it is estimated that it will take S450 to complete the water line. The water installed by the contractor. The original the storm drain was $17,000 and no chan made to the budget. The contractor has paid $7.2 materials and estimates that it will cost $9,764 to the storm drain. The contractor will install the drain. The original estimate for the outside li $23,600 and no changes have been made to the b The contractor has subcontracted the outside lighting for $23,600. The subcontractor has billed $11,230 for materials. Determine the total estimated cost at comple tion for the project and the variance for each cost code Conclusion To get an accurate picture of the financial status of a project, unbilled committed costs must be included with the costs to date. This may be done by the accounting package or ina separate spreadsheet. Additionally, committed costs should be used to estimate the cost and profit at completion for To prepare the monthly and annual balance sheets, the overbillings or underbillings must be calculated h project, which may be done on the work on hand estima sprea ternal controls for the company must be implemented to prevent theft and misuse of the assets. Finally, there are many accounting systems designed just for contractors. Construction companies should carefully choose the pack age that best fits the company's needs. 9. A contractor has a contract to remove and replace the existing landscape and sidewalks around an ofice ing. The work includes demolition of the existing land- scaping and sidewalks, importing fill and grading around the office building, constructing new concrete sidewalks and new landscaping. The contractor uses the cost cods in Figure 2-6. The contractor will perform all of the worik except placing the site concrete and the landscaping. Te original estimate for the demolition was $30,000 and a Discussion Questions tted 2. Why is labor seldom a committed cost? 3. What are underbillings and how do they occur? 4. What are overbillings and how do they occur? $5,00 change order has been approved to remove som unexpected debris found during the demolition. The dem 6. What are the six key principals of internal controls and how do they protect the company's financial resources? olition work has been completed at a cost original estimate for the fill and grading was $17 of $33,562. The What should you look for in a construction accounting $2000 change order for importing additional fill to replace the debris has been approved. The fill and grading costs date are $17,264 and the estimated cost to complete been estimated at $2,236. The original budget for the Bb to pour the concrete was $19,200 and no changes been made. The concrete labor has been subcont out for $19,200, for which the contractor has rece for $15,200. The original budget for th 8. A contractor has a contract to construct the sanita er, water line, storm drain, and street lighting for a new subdivision. The contractor uses the cost codes in Figure 2-6. The original estimate for the sewer was $25,000 and a $3,200 change order has been approved to $25,000and a $3,200kn completed by The original estimate for the landscap ewalks was $9,900 and no changes have been contractor h $1,950 of concrete will be needed to comp The add a manhole. The sewer work has been as spent $7,425 for concrete and estimate