Direct Margin

Direct margin is equal to the net revenues less the actual direct cost of materials, land, subcontractors, payroll, and other direct (prime) costs. From the direct margin is subtracted the indirect costs to determine the gross margin.

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 entry to complete the transfer. This article explains this process in detail.

Definition of Contribution Margin

Contribution Margin

Contribution margin is a core business concept and is often used in cost accounting to identify the amount of financial contribution a sold product provides to the company.  Simply put, contribution margin is the sales price less the direct costs (sometimes referred to as variable costs). 

How to Calculate the Best Markup for a Construction Project

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 should consider his indirect costs, overhead, taxes, and final profit desired. 

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