Question 1: (10 points) The Frozen North Construction Company would like to forecast its minimum volume of work (turnover) in order to break even (i.e. cover its corporate overheads) for the coming year. The company's previous year's corporate overheads were $900,000. The company anticipates 22% inflation and 6% growth in the firm for the coming year. It also expects to achieve a gross margin of 13% on its projects, based on old experience. The company defines gross margin as a percentage of revenue (i.e. selling price). Determine the minimum volume of work, which will allow the Frozen North Company to break even at the end of the coming year. Question 2: (20 points) Complete the attached tender summary form using the following information: Indirect Costs (IDC) = $1,650,000 Contingency (risk/opportunity allowance) = $700,000 Margin = $9% of subtotal cost Distribute both indirect costs and contingency to all appropriate items (i.e. excluding the items that should not receive indirect cost spread or contingency spread as discussed in the lecture), in proportion their contribution to the total direct cost (DC) (excluding the cost of all items that do not receive indirect cost spread or contingency spread). Distribute margin to all appropriate items (as discussed in the lecture), in proportion to each item's contribution to the subtotal cost. Note: please show your calculate steps; You could submit your answer and calculations to the 2nd questions in Excel. Bill Item Description Bill Est Unit Labour Temp Material Perm Material Owned Equipt Rented Equipt Subs Total DC IDC Spread Subtotal Cost Contingency Cost Margin Spread Total Bid Price Bid Rate Bid Price 1.1 1 1 LS 37000 42000 0 11000 0 0 2.1 79000 82000 m3 316300 157000 0 462000 137600 0 2.2 55000 62000 m3 594000 80000 0 255000 14320 0 3.1 7000 6200 m2 68000 8000 55450 40000 0 0 0 3.2 2300 2300 T 12000 0 38500 16000 0 58000 3.3 550) 520 m3 26000 0 67500 0 6000 0 Site Establishment Bulk Excavation Detailed Excavation Formwork for Footings Reinforcement for Footings Concrete for foolings Drilling of rock- Provisional Excavating of Rock -Provs. Erect Bridges Traffic Diversion - Prime Cost Landscaping TOTALS 4.1 11000 11000 m3 400000 71000 0 550000 167000 0 4.2 8500 8500 m3 355000 46000 0 453000 53000 0 5.1 10 10 item 0 0 0 0 0 0 2100000 6.1 1 1 1 LS 0 0 0 0 0 900000 7.1 1 1 LS 0 0 0 0 0 455000 Question 1: (10 points) The Frozen North Construction Company would like to forecast its minimum volume of work (turnover) in order to break even (i.e. cover its corporate overheads) for the coming year. The company's previous year's corporate overheads were $900,000. The company anticipates 22% inflation and 6% growth in the firm for the coming year. It also expects to achieve a gross margin of 13% on its projects, based on old experience. The company defines gross margin as a percentage of revenue (i.e. selling price). Determine the minimum volume of work, which will allow the Frozen North Company to break even at the end of the coming year. Question 2: (20 points) Complete the attached tender summary form using the following information: Indirect Costs (IDC) = $1,650,000 Contingency (risk/opportunity allowance) = $700,000 Margin = $9% of subtotal cost Distribute both indirect costs and contingency to all appropriate items (i.e. excluding the items that should not receive indirect cost spread or contingency spread as discussed in the lecture), in proportion their contribution to the total direct cost (DC) (excluding the cost of all items that do not receive indirect cost spread or contingency spread). Distribute margin to all appropriate items (as discussed in the lecture), in proportion to each item's contribution to the subtotal cost. Note: please show your calculate steps; You could submit your answer and calculations to the 2nd questions in Excel. Bill Item Description Bill Est Unit Labour Temp Material Perm Material Owned Equipt Rented Equipt Subs Total DC IDC Spread Subtotal Cost Contingency Cost Margin Spread Total Bid Price Bid Rate Bid Price 1.1 1 1 LS 37000 42000 0 11000 0 0 2.1 79000 82000 m3 316300 157000 0 462000 137600 0 2.2 55000 62000 m3 594000 80000 0 255000 14320 0 3.1 7000 6200 m2 68000 8000 55450 40000 0 0 0 3.2 2300 2300 T 12000 0 38500 16000 0 58000 3.3 550) 520 m3 26000 0 67500 0 6000 0 Site Establishment Bulk Excavation Detailed Excavation Formwork for Footings Reinforcement for Footings Concrete for foolings Drilling of rock- Provisional Excavating of Rock -Provs. Erect Bridges Traffic Diversion - Prime Cost Landscaping TOTALS 4.1 11000 11000 m3 400000 71000 0 550000 167000 0 4.2 8500 8500 m3 355000 46000 0 453000 53000 0 5.1 10 10 item 0 0 0 0 0 0 2100000 6.1 1 1 1 LS 0 0 0 0 0 900000 7.1 1 1 LS 0 0 0 0 0 455000