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## MARTIN, MARC RAMIREZ, JAMES

Knowledege

SUCCESS
Budget

Overhead costs that cannot be charged to a specific construction project or charged to the equipment section of the income statement

Reasons:

## Projection of cash needs

Projection of profits

DAILY VIGILANCE

What to Include?
Employee Wages and Salaries Employee Benefits

Employee Retirement
Employee Recruiting Employee Training Employee Taxes Insurance Interest Expense

What to Include?
Janitorial and Cleaning Legal and Professional Services

## Meals and Entertainment

Office Supplies Office Purchase Office Rent Office Utilities Postage & Delivery

What to Include?
Publications and Subscriptions Repairs and Maintenance

Telephone Travel Unallocated Labor Unallocated Materials Miscellaneous

Lacebal, Juan III T.

Company growth New markets

Example: Determine the annual budget for office utilities. Utility costs are expected to increase by 5% per year due to inflation. Solution: The total cost of utilities for the past twelve months was \$1745.59. Increasing this by 5% we get \$1833. For budgetary purposes we round this to \$1850

References:
Construction Accounting & Financial Management, 3/e Steven Peterson Chapter 9 Construction Accounting & Financial Management

Vary in linear Change in direct proportion to the level of production. Total variable cost increase when more units are produced and decreases when less units are produced. Variable cost is constant if expressed on a per unit basis.

Example:
Total Variable Cost Units Produced Variable Cost per Unit \$10,000 5,000 \$2.00 \$20,000 10,000 \$2.00 \$30,000 15,000 \$2.00

Example:

A company has two salaried employees working as estimators, the cost of these employees is fixed over the volume of work that can be won by the employers.

Example: If a company currently has two office employees and rents office space that can accommodate three employees. the cost of office rent is fixed unless the volume of work increases such that the company needs to hire two or more office employees. office rent is fixed over the range of the revenues that may be supported by three or less office employees.

Example:
Total Fixed Cost \$30,000 Units Produced 5,000 Fixed Cost per Unit \$6.00 \$30,000 10,000 \$3.00 \$30,000 15,000 \$2.00

(semi-variable costs) Contain both a variable cost component and a fixed cost component

Example:

if a company paid estimators a base salary plus a bonus based on the volume of work won, the cost of the estimators is a mixed cost. The salary is a fixed cost, whereas the bonus is a variable cost.

http://accountingexplained.com/mana gerial/cost-behavior/

## http://classes.bus.oregonstate.edu/sprin g07/ba422/Management%20Accounting %20Chapter%204.htm

Construction Accounting & Financial Management, 3/e (Steve Peterson)

## SAMPLE OF A GENERAL OVERHEAD BUDGET

Construction Accounting & Financial Management, 3/e (Steven Peter son), Chapter 9 Construction Accounting & Financial Management

EXAMPLE 9-3
Prepare a general overhead budget for a company given the following. The companys revenues are shown below.

SSS

Rate

## FOR SSS: http://www.sss.gov.ph/sss/printversion.jsp?id=

111&file=regi_contrib_table.html http://nonoying.com/news/new-ssscontribution-table-in-june-or-july-2013/ FOR PHILHEALTH: http://www.philhealth.gov.ph/circulars/2012/cir c57_2012.pdf FOR PAG-IBIG: http://www.pagibigfund.gov.ph/dlforms/provide nt/03122012/FPF060_Member'sContribution Remittance_V01.pdf