Tag: Direct Costs
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Estimates, Bids and Proposals – Differences Among Offers in Construction
Estimates, bids and proposals are terms used to present a dollar value associated with construction work. The terms are NOT interchangeable.
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Markup on Materials – Setting the Proper Rate
There is no preset national standard for markup on materials. The IRS Construction Industry Audit Technique Guide (May 2009) states that from the Means Contractor’s Pricing Guide include a standard 10% markup on material for profit.
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Roofer – Business Dynamics
Business dynamics for roofers depend heavily on labor to accomplish their task. They are also highly susceptible to weather conditions and dangerous variables.
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Markup Percentage for Remodelers
In the construction industry, remodelers face a different set of criteria than your traditional new home builder. Because of these issues the markup percentage on costs is generally much higher than other forms of construction.
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Construction Accounting Terminology
In construction accounting, accountants and bookkeepers use certain terms and there are distinct meanings associated with these terms. This article is designed to introduce beginner accountants and contractors to these terms from the perspective of financial reporting.
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Use Phase Accounting in Construction – Part III (Walls & Flooring)
The primary goal of phase accounting is to break out the construction costs into distinct groups in order to assist management in identifying issues related to cost overruns or profitability.
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QuickBooks in Construction Accounting – Transfer Work in Process to Cost of Goods Sold
QuickBooks does not have a seamless subroutine to transfer costs from construction in process control account to the profit in loss statement’s cost of construction section. Therefore, the accountant has to export data to a spreadsheet and then sum the respective functional costs of materials, subcontractors, labor, land etc. and then make a general journal…
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How to Calculate the Best Markup for a Construction Project
Every construction project has costs beyond the direct costs and the contractor wants to earn a profit. To cover these costs he must have an appropriate markup. The contractor must give consideration to many variables and circumstances to calculate the best markup for a construction project. To determine the best markup percentage on costs, the contractor…
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What is a Reasonable Profit in Construction?
For any company, profit is based on the risk reward concept. With construction, what should be the profit (reward) given the risk? What is a reasonable expectation given the industry and the particular business? There is no single correct answer. The construction industry is divided into several significant branches. This article is focused on the residential contractor. From…
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Best Format for the Construction Profit and Loss Statement
As a construction company owner, you need a profit and loss statement that conveys information in a format that will identify how much you are truly making as a profit. The best format is a construction profit and loss statement identifying contract revenues, direct costs, indirect costs and the overhead expenses. This format most closely matches the…