A contractor performs construction work and incurs the direct costs (provided be

Question

A contractor performs construction work and incurs the direct costs (provided below) finishing the project at the end of Month 4. She bills the client for 125% of direct costs and the client pays one month after receiving the bill. In addition to the direct costs, the contractor has $20,000 per month in indirect costs. The contractor pays the direct costs and indirect costs incurred at the end of the month in which they are incurred. Retention (amount that the owner withholds from payments) is 10% and is disbursed to the contractor two months after the work is finished. a. Complete the table below. Fill in every box, even if it is $0. b. Chart the cumulative cost and cumulative payments. Show the costs as positive (not negative) numbers. Month End Direct Cost Indirect Cost Total Cost Cumulative Total Cost Amount Billed Retention Payment Received Cumulative Payments Bank Balance 4 $100,000 $200,000 S200,000$100,000

Explanation / Answer

Month end 1 2 3 4 5 6 $ $ $ $ direct cost 100000 200000 200000 100000 indirect cost 20000 20000 20000 20000 total cost 120000 220000 220000 120000 cumulative TC 120000 340000 560000 680000 amount bill includes 125% of DC and IC amount billed 145000 270000 270000 145000 retention 14500 27000 27000 14500 direct cost received 125000 250000 250000 125000 indirect cost 20000 20000 20000 20000 payment received 125000 270000 270000 145000 20000 cumulative Payment 125000 395000 665000 810000 830000

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