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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A contractor has the following historical costs, expressed in $10°, for the last 4 years: Year Cp (Cost of Production) Co (Office overhead) $12 m a (Job overhead) $240 m $7.0 m $14 m $13 m 2 $320 m $5.6 m $280 m $8.0 m $300 m $15 m $7.6 m a) Calculate office and job overhead rates Ro=Co/Cp and Rj=Cj/Cp, and determine the rates (i.e. Ro and Rj) for year 5. (Hint: Use linear regression to estimate Ro and Rj for year 5). b) If in year 5 a project is estimated to have a direct labor and material cost of $150 million, then calculate the total overhead amount. 3.
Transcribed Image Text:A contractor has the following historical costs, expressed in $10°, for the last 4 years: Year Cp (Cost of Production) Co (Office overhead) $12 m a (Job overhead) $240 m $7.0 m $14 m $13 m 2 $320 m $5.6 m $280 m $8.0 m $300 m $15 m $7.6 m a) Calculate office and job overhead rates Ro=Co/Cp and Rj=Cj/Cp, and determine the rates (i.e. Ro and Rj) for year 5. (Hint: Use linear regression to estimate Ro and Rj for year 5). b) If in year 5 a project is estimated to have a direct labor and material cost of $150 million, then calculate the total overhead amount. 3.
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