2969808
Description
Flashcards by Samuel Metcalfe, updated more than 1 year ago
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Created by Samuel Metcalfe
almost 9 years ago
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| Question | Answer |
| Cost defininition | The amount of money sacrificed for goods and services to bring a current or future cash flow to the organization |
| Expenses | Costs that are expired |
| Direct costs | Easily tracked to product or service. e.g. materials, labour like builders |
| Indirect costs | Not easily tracked to product or service. e.g. ladders, receptionists |
| Overhead | Indirect costs |
| 3 Types of overhead | -Manufacturing overhead - Administrative expenses - Selling expenses |
| Fixed costs, variable costs and mixed costs | - Fixed costs do not increase or decrease when output varies - Variable costs increase or decrease in relation to output - Mixed costs have a fixed and variable component |
| Actual costing | Records product costs on actual cost of materials, actual cost of labour and actual overhead cost incurred - experienced during the reporting period |
| Normal costing | Uses a predetermined annual overhead rate, based on expected overhead costs and production volumes for a whole year |
| Differences in usability of actual costing and normal costing | Actual costing - the easiest, however may take longer. Normal - More stability if variation in production volumes, less variation in reported costs. Good if having to report back to shareholders etc |
| Main costing methods | Process costing - Average cost per each unit of production - done by department Job order costing - Differentiates cost per job (or hour) - done by job Activity based costing - Calculates what percentage of overhead should be assigned to a job - works in complicated environments |
| Cost indices | Normalized average of price relatives for a given class of goods, in a given region during a given time Different ones e.g. NZTA, reserve bank..different types power, water supply .. |
| Factors increasing acuracy | Quantity and cost of: - Construction materials - Labour - Equipment |
| Things affecting material costing accuracy | - Quantity: As per drawing, modifications -Waste -Pricing |
| Pricing definition and what should be included | Assigns a dollar value to a work item based on given specifications and predetermined quantities required Include: - Permanent and temporary materials - Labour Required -Eqipment required - Consumables ie fuel, tools |
| Percentage of labour costs out of total construction costs | 30 - 50 % |
| Positive effects of union membership | For worker: -Right to strike, wages, job conditions - Benefits and job security - The power to act collectively For employer: - Available pool of skilled labour - Fixed wages and uniform conditions prescribed |
| Negative effects of union membership | For worker: Payment for initiation fees, dues etc For Employer: - Restrictive work rules - Inhibits innovation- Workers have no loyalty to contractors |
| External productivity factors | - Market conditions - Environmental conditions |
| Productivity internal factors | - Work conditions - Management conditions |
| Effect of making workers work a lot | Increases hours per day and days per week will cause production efficency to drop. 40 hours or less is ideal |
| Effect of large businesses on office expenses | The larger the business, generally the smaller the % of office expenses will be |
| Contingencies | Amount of money added to estimate to cover unforeseen needs of a project, difficulties, or estimation innacurracies |
| Three main components of the estimated bid price | -Direct cost -Jobsite overhead -Markup |
| Requirements for profit | - Need to have sufficient profit for a return on equity - Corresponds to industry average - May need competitive bidding strategies - As high as possible that the competitive market will bear |
| A cost model accuracy | Cannot be expected to give an accuracy greater than 5% - even less for engineering costs |
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