Exercise 5-28 (Algo) Methods of Estimating Costs: Engineering Estimates (LO 5-1, 2) Ferdinand Construction (FC) manages the design and construction of hospitals. Ferdinand has developed several formulas that it uses o quote jobs. These include costs of basic construction but exclude equipment and furniture. These estimates are also dependent on the purpose of the hospital (teaching hospitals are more costly to build) and location (downtown hospitals are more costly to build). Both of these are based on the building costs. The estimated costs also depend on whether the hospital has few or many stories (high- rise buildings are more expensive). The following are the cost estimates for one region in the Northeast: Design costs Building costs-per square foot (low-rise) Building costs - per square foot (high-rise) Downtown premium Teaching hospital premium Design costs Building costs Required: A local university medical school has asked Ferdinand Construction to provide a quote on a high-rise teaching hospital located in the city center downtown. The university estimates the hospital will be 307,000 square feet in total. Based on the engineering estimates above, what will such a hospital cost to build? Note: Enter your answers in thousands. Downtown premium Teaching hospital premium Estimated cost Amounts in thousands $ $ 15,007,000 370 430 0 60% 20%
Exercise 5-28 (Algo) Methods of Estimating Costs: Engineering Estimates (LO 5-1, 2) Ferdinand Construction (FC) manages the design and construction of hospitals. Ferdinand has developed several formulas that it uses o quote jobs. These include costs of basic construction but exclude equipment and furniture. These estimates are also dependent on the purpose of the hospital (teaching hospitals are more costly to build) and location (downtown hospitals are more costly to build). Both of these are based on the building costs. The estimated costs also depend on whether the hospital has few or many stories (high- rise buildings are more expensive). The following are the cost estimates for one region in the Northeast: Design costs Building costs-per square foot (low-rise) Building costs - per square foot (high-rise) Downtown premium Teaching hospital premium Design costs Building costs Required: A local university medical school has asked Ferdinand Construction to provide a quote on a high-rise teaching hospital located in the city center downtown. The university estimates the hospital will be 307,000 square feet in total. Based on the engineering estimates above, what will such a hospital cost to build? Note: Enter your answers in thousands. Downtown premium Teaching hospital premium Estimated cost Amounts in thousands $ $ 15,007,000 370 430 0 60% 20%
Chapter1: Financial Statements And Business Decisions
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Exercise 5-28 (Algo) Methods of Estimating Costs: Engineering Estimates (LO 5-1, 2)
Ferdinand Construction (FC) manages the design and construction of hospitals. Ferdinand has developed several formulas that it uses
to quote jobs. These include costs of basic construction but exclude equipment and furniture. These estimates are also dependent on
the purpose of the hospital (teaching hospitals are more costly to build) and location (downtown hospitals are more costly to build).
Both of these are based on the building costs. The estimated costs also depend on whether the hospital has few or many stories (high-
rise buildings are more expensive). The following are the cost estimates for one region in the Northeast:
Design costs
Building costs - per square foot (low-rise)
Building costs - per square foot (high-rise)
Downtown premium
Teaching hospital premium
Design costs
Building costs
Downtown premium
Teaching hospital premium
Estimated cost
$ 15,007,000
370
430
Required:
A local university medical school has asked Ferdinand Construction to provide a quote on a high-rise teaching hospital located in the
city center downtown. The university estimates the hospital will be 307,000 square feet in total. Based on the engineering estimates
above, what will such a hospital cost to build?
Note: Enter your answers in thousands.
Amounts in
thousands
60%
20%
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