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Collingwood Contractors (CC) designs and builds new model homes for individual customers. CC has developed a reputation in the market for relatively upscale, unique designs with high-end finishings. CC has developed several formulas, which it uses to estimate costs and provide price quotes for prospective buyers. These include costs for materials, labor, and other resources. Although multiple configurations are possible for any house, CC uses three levels (or tiers) to represent increasing levels of luxury in terms of materials used. In addition, the customer can choose among three levels of increasingly sophisticated appliances and other house equipment. Finally, there is cost to bring utilities (electricity, water, and so on) to the house if required. Of course, these estimates are dependent on the region of the country and whether the lot is located in a city or in a suburb or rural area. If the building site is in a city, a premium is added based on the building and equipment costs. The following are the cost estimates for one region in the Northwest:

Collingwood Contractors (CC) designs and builds new model homes for individual customers. CC has developed a reputation in the market for relatively upscale, unique designs with high-end finishings. CC has developed several formulas, which it uses to estimate costs and provide price quotes for prospective buyers. These include costs for materials, labor, and other resources. Although multiple configurations are possible for any house, CC uses three levels (or tiers) to represent increasing levels of luxury in terms of materials used. In addition, the customer can choose among three levels of increasingly sophisticated appliances and other house equipment. Finally, there is cost to bring utilities (electricity, water, and so on) to the house if required. Of course, these estimates are dependent on the region of the country and whether the lot is located in a city or in a suburb or rural area. If the building site is in a city, a premium is added based on the building and equipment costs. The following are the cost estimates for one region in the Northwest:

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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Exercise 5-27 (Algo) Methods of Estimating Costs: Engineering Estimates (LO 5-1, 2) Collingwood Contractors (CC) designs and builds new model homes for individual customers. CC has developed a reputation in the market for relatively upscale, unique designs with high-end finishings. CC has developed several formulas, which it uses to estimate costs and provide price quotes for prospective buyers. These include costs for materials, labor, and other resources. Although multiple configurations are possible for any house, CC uses three levels (or tiers) to represent increasing levels of luxury in terms of materials used. In addition, the customer can choose among three levels of increasingly sophisticated appliances and other house equipment. Finally, there is cost to bring utilities (electricity, water, and so on) to the house if required. Of course, these estimates are dependent on the region of the country and whether the lot is located in a city or in a suburb or rural area. If the building site is in a city, a premium is added based on the building and equipment costs. The following are the cost estimates for one region in the Northwest: Design and administrative costs Building costs per square foot (Tier I) Building costs per square foot (Tier II) Building costs per square foot (Tier III) Equipment (appliances, and so on) -- Ruby Equipment (appliances, and so on) - Sapphire Equipment (appliances, and so on) -- Emerald Utilities required? If yes, ... City premium (applied to building and equipment costs) Required: a. A customer has expressed interest in having CC build a Tier III, 5,100-square-foot home. The building site is a city lot and the customer wants the Sapphire level equipment. Based on the engineering estimates above, what will such a house cost to build? No additional utilities access is required. Complete this question by entering your answers in the tabs below. b. Another customer has expressed interest in having CC build a smaller, Tier I, home, but with emerald-level equipment. This home will be on a vacant lot in the country and require utilities access to be added. The customer has chosen a 2,800-square-foot design. Based on the engineering estimates above, what will such a house cost to build? Design costs Building costs Equipment costs Required A Required B A customer has expressed interest in having CC build a Tier III, 5,100-square-foot home. The building site is a city lot and the customer wants the Sapphire level equipment. Based on the engineering estimates above, what will such a house cost to build? No additional utilities access is required. City premium Utilities (if required) Estimated cost $ 41,000 116 186 241 $ 21,000 30,000 39,000 42,000 10% < Required A Required B >
Transcribed Image Text:Exercise 5-27 (Algo) Methods of Estimating Costs: Engineering Estimates (LO 5-1, 2) Collingwood Contractors (CC) designs and builds new model homes for individual customers. CC has developed a reputation in the market for relatively upscale, unique designs with high-end finishings. CC has developed several formulas, which it uses to estimate costs and provide price quotes for prospective buyers. These include costs for materials, labor, and other resources. Although multiple configurations are possible for any house, CC uses three levels (or tiers) to represent increasing levels of luxury in terms of materials used. In addition, the customer can choose among three levels of increasingly sophisticated appliances and other house equipment. Finally, there is cost to bring utilities (electricity, water, and so on) to the house if required. Of course, these estimates are dependent on the region of the country and whether the lot is located in a city or in a suburb or rural area. If the building site is in a city, a premium is added based on the building and equipment costs. The following are the cost estimates for one region in the Northwest: Design and administrative costs Building costs per square foot (Tier I) Building costs per square foot (Tier II) Building costs per square foot (Tier III) Equipment (appliances, and so on) -- Ruby Equipment (appliances, and so on) - Sapphire Equipment (appliances, and so on) -- Emerald Utilities required? If yes, ... City premium (applied to building and equipment costs) Required: a. A customer has expressed interest in having CC build a Tier III, 5,100-square-foot home. The building site is a city lot and the customer wants the Sapphire level equipment. Based on the engineering estimates above, what will such a house cost to build? No additional utilities access is required. Complete this question by entering your answers in the tabs below. b. Another customer has expressed interest in having CC build a smaller, Tier I, home, but with emerald-level equipment. This home will be on a vacant lot in the country and require utilities access to be added. The customer has chosen a 2,800-square-foot design. Based on the engineering estimates above, what will such a house cost to build? Design costs Building costs Equipment costs Required A Required B A customer has expressed interest in having CC build a Tier III, 5,100-square-foot home. The building site is a city lot and the customer wants the Sapphire level equipment. Based on the engineering estimates above, what will such a house cost to build? No additional utilities access is required. City premium Utilities (if required) Estimated cost $ 41,000 116 186 241 $ 21,000 30,000 39,000 42,000 10% < Required A Required B >
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