95.00% 88.00% Retention held by the owner-x% of bill to owner Retention held from the sub-y% of sub amount Sub costs are paid when paid.; Labor is paid weekly; 45% PO, 15% of the equipment, and 35% of the Material cost is paid monthly before the payment is received from the owner. All other costs are pay when paid. Gross Profit Margin 28% All previously held Retention: month 1, 2, 3 will be released during month 3; months 4 & 5 will be released during month 7 GC will send the invoice (bill or pay apps) to the owner at the end of the month; GC will receive payment from the owner before the end of the next (following) month. Month 5 1 2 3 4 Direct Costs Materials Labor Equipment Project Overhead Sub Contractor $5,000 $2,700 $1,000 $1,500 $4.000 5% 12% $6,000 $500 $1,700 $1,100 $6.000 $3,500 $300 $200 $100 63.000 $2,000 $200 $300 $200 63.300 6 7 Totals $16,500 $3,700 $3,200 $2,900 616.5AA
95.00% 88.00% Retention held by the owner-x% of bill to owner Retention held from the sub-y% of sub amount Sub costs are paid when paid.; Labor is paid weekly; 45% PO, 15% of the equipment, and 35% of the Material cost is paid monthly before the payment is received from the owner. All other costs are pay when paid. Gross Profit Margin 28% All previously held Retention: month 1, 2, 3 will be released during month 3; months 4 & 5 will be released during month 7 GC will send the invoice (bill or pay apps) to the owner at the end of the month; GC will receive payment from the owner before the end of the next (following) month. Month 5 1 2 3 4 Direct Costs Materials Labor Equipment Project Overhead Sub Contractor $5,000 $2,700 $1,000 $1,500 $4.000 5% 12% $6,000 $500 $1,700 $1,100 $6.000 $3,500 $300 $200 $100 63.000 $2,000 $200 $300 $200 63.300 6 7 Totals $16,500 $3,700 $3,200 $2,900 616.5AA
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:95.00%
88.00%
Retention held by the owner-x% of bill to owner
Retention held from the sub-y% of sub amount
Sub costs are paid when paid.; Labor is paid weekly; 45% PO, 15% of the equipment, and 35% of the Material cost is paid monthly before the payment is received from the owner. All other costs are pay when paid.
Gross Profit Margin
28%
All previously held Retention: month 1, 2, 3 will be released during month 3; months 4 & 5 will be released during month 7
GC will send the invoice (bill or pay apps) to the owner at the end of the month; GC will receive payment from the owner before the end of the next (following) month.
Month
5
1
2
3
4
Direct Costs
Total Direct Costs
Profit &GOH (Indirect Costs)
Bill To owner
Money Received from the owner
Retention held by the owner
Retention released by the owner
Total Money Received (Cash In)
Paid for Materials
Paid for Labor
Paid to Equipment Supplier
Paid to Project Overhead
Paid to Sub Contractor
Retention held from Sub Contractor
Retention released to the Sub
Total Payments (Cash out)
Materials
Labor
Equipment
Project Overhead
Sub Contractor
Net Cash Flow at Month's end (Cash in - Cash out)
Total cash generated at Month's end (after payment is
received from the owner)
Cash needed for the project before payment is received
from the owner
Effective Cash needed for the project before payment is
received from the owner
Total Cash invested in the project before payment is
received from the owner
$5,000
$2,700
$1,000
$1,500
$4,000
$14,200
5%
12%
(14,200 x 28/100)-
3,976
0
(14,200 +3,976)=
18,176
$6,000
$500
$1,700
$1,100
$6,000
$15,300
(11,100 x 28/100)
= 3,108
(11,100+3,108)
14,208
Money Received from Owner/GC (CASH IN)
(15,300 x 28/100)
=4,284
(15,300+4,284)
19,584
CASH FLOW
$3,500
$300
$200
$100
$7,000
$11,100
CASH INVESTED
Month with max cash need and the amount:
Total amount of cash needed for the project is
-
Payments made to suppliers, labor, and sub (CASH OUT)
$2,000
$200
$300
$200
$2,700
$5,400
(5,400 x 28/100)=
1,512
(5,400 +1,512)=
6,912
6
7
Totals
$16,500
$3,700
$3,200
$2,900
$19,700
$46,000
(3,976+4,284
+3,108 +
1,512)=12,880
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