9. Cost Control a. Why was EID's first price so high? Was their subsequent offer reasonable? b. When did Woody's know they were in trouble with over-expenditure? What was the result? c. How should the project budget and expenditures be set out for cost control?
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- It may also have been driven by incomplete scope definition, lack of detailed work breakdown, or a misalignment of incentives. - Their subsequent offer being reasonable would depend on: - A clearer, more defined scope and a refined cost estimate (lower risk Show more…
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ANNEXURE J: SUMMATIVE ASSESSMENT 2 BACKGROUND: Wilsons Bayly Holmes ("WBHO") is a construction entity. The entity's official website states: "Our activities cover the full construction spectrum and are divided into three main operating divisions - Building Construction, Civil Engineering and Roads and Earthworks. WBHO's offices are strategically located in Johannesburg, Cape Town, Durban and Port Elizabeth in South Africa and Gaborone, Accra and Maputo in Botswana, Ghana and Mozambique respectively. In the UK, the Byrne Group (a subsidiary of WBHO) is based in London, while Russell-WBHO (another subsidiary of WBHO) operates from Manchester". REQUIRED: On the following page, you are provided with a link to WBHO's 2022 Annual Audited Financial Statements as well as the entity's official website. Utilise these sources and supplement them with your own research to perform the following tasks: 1. Perform a detailed analysis in which you identify and explain all the various costs which one can expect to be incurred by WBHO (operational and other). Classify these costs into the following categories and motivate the classification: - Direct material - Direct labour - Variable manufacturing overheads - Fixed manufacturing overheads - Variable non-manufacturing overheads - Fixed non-manufacturing overheads 2. Propose a suitable cost-driver for each of the identified overheads (as best as your research allows you) should WBHO wish to implement an activity-based costing method. Motivate each cost-driver proposed. ANNEXURE J: SUMMATIVE ASSESSMENT 2 3. Based on all that you have learnt about WBHO through the above analysis and research, propose the pricing strategy which will be best suited for WBHO's business and market. Motivate why the proposed pricing strategy will suit WBHO the best. SOURCES: - WBHO.2022.Home page. Retrieved from: https://www.wbho.co.za/ [Accessed 12 October 2022] - WBHO.2022.Home page. Retrieved from: https://www.wbho.co.za/wp-content/uploads/2022/09/WBHO-Full-Audited-Financial-Statements-for-the-year-ended-30-June-2022.pdf [Accessed 12 October 2022]
Akash M.
"Blast it!" said David Wilson, president of Teledex Company. "We've just lost the bid on the Koopers job by $2,000. It seems we're either too high to get the job or too low to make any money on half the jobs we bid." Teledex Company manufactures products to customers' specifications and uses a job-order costing system. The company uses a plantwide predetermined overhead rate based on direct labor cost to apply its manufacturing overhead (assumed to be all fixed) to jobs. The following estimates were made at the beginning of the year: Department Fabricating Machining Assembly Total PlantManufacturing overhead $ 353,500 $ 404,000 $ 90,900 $ 848,400Direct labor $ 202,000 $ 101,000 $ 303,000 $ 606,000 Jobs require varying amounts of work in the three departments. The Koopers job, for example, would have required manufacturing costs in the three departments as follows: Department Fabricating Machining Assembly Total PlantDirect materials $ 3,200 $ 200 $ 1,600 $ 5,000 Direct labor $ 3,200 $ 500 $ 6,400 $ 10,100 Manufacturing overhead ? ? ? ? Required:1. Using the company's plantwide approach:a. Compute the plantwide predetermined rate for the current year.b. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job. 2. Suppose that instead of using a plantwide predetermined overhead rate, the company had used departmental predetermined overhead rates based on direct labor cost. Under these conditions:a.Compute the predetermined overhead rate for each department for the current year.b. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job. 4. Assume that it is customary in the industry to bid jobs at 150% of total manufacturing cost (direct materials, direct labor, and applied overhead).a.What was the company's bid price on the Koopers job using a plantwide predetermined overhead rate?b.What would the bid price have been if departmental predetermined overhead rates had been used to apply overhead cost?
A company called Arbor Industries submitted an artist's sketch for the ACME evaluation team to picture what the landscaping would look like. Arbor was selected with a bid of $175,000, substantially lower than any other submission. Arbor then prepared a detailed landscaping plan based on existing drawings of the site provided in the tender. Arbor met with the ACME senior executives to agree on a project start date, access and security of plant and equipment, and a fixed price contract. A contract was duly signed. Since the original project was scoped and started, the original finance manager had secured a new position with another company and was set to leave in the third week of February 2001, just as the lawn started to brown off and die in patches. The new finance manager, who started one week later, was asked by the company to continue in the role of her predecessor on the project. Risk is the effect of uncertainty that prejudices the successful achievement of the project outcome, by adversely impacting on cost, time, or functional objectives. Refer to the theory related to risk considerations in project selection and critique the case study project from a risk consideration perspective.(25 marks) A discussion of the risks associated with the project will enhance your answer. Guidelines • Identify the theory related to risk considerations in project selection. • Critique the case study project from a risk consideration perspective. • Discuss the risks associated with the project. Show introduction, body of discussion and conculusion Include intext refernces and reference list
Shu N.
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