Calculate the Interests Costs of All Listed Equipment.

For the purposes of this assignment, use the following formulas to calculate Montly, Yearly, and Total interest costs, respectively.

Total Interest Cost

Example

A skid steer was purchased for $40,000. The construction company secured a $30,000 loan at 5% interest over a 3 year term. The total interest cost would be calculated as follows:

Yearly Interest Cost

Example

The yearly interest cost for the skid steer would be calculated as follows:

Monthly Interest Cost

Example

The monthly interest cost for the skid steer would be calculated as follows:

Calculate the Depreciation of All Listed Equipment.

For the purposes of this assignment, use the following formulas to calculate Montly, Yearly, and Total depreciation costs, respectively.

Total Depreciation Cost

Example

A skid steer was purchased for $40,000. The scrap value of the skid steer after its service life of 6 years is $7000. The total depreciation cost would be calculated as follows:

Yearly Depreciation Cost

Example

The yearly depreciation cost for the skid steer would be calculated as follows:

Monthly Depreciation Cost

Example

The monthly depreciation cost for the skid steer would be calculated as follows:

Calculate the Monthly Taxes of All Listed Equipment.

For the purposes of this assignment, use the following formulas to calculate Montly taxes.

Monthly Taxes

Example

A skid steer has yearly tax costs of $800. The monthly tax cost would be calculated as follows:

Calculate the Total Monthly and Yearly Costs of All Listed Equipment.

Total Monthly Costs

Add the monthly interest, depreciation, and tax costs of each piece of equipment to calculate the total monthly cost.

Total Yearly Costs

Add the yearly interest, depreciation, and tax costs of each piece of equipment to calculate the total yearly cost.

What to Enter in the Tools Table

The company accountant has given you the following numbers to enter in the Tools & Equip tab of the Estimating Workbook based on a forecast completed earlier.

In the Total Tools column (B), add the following values for each month:

What to Enter in the Overhead Table

The company accountant has given you the following numbers to enter in the Overhead tab of the Estimating Workbook based on a forecast completed earlier.

Enter the Estimated Yearly Gross Overhead, Gross Wages, and Calculate Overhead as a Percentage of Income

Base your calculation on an estimated yearly gross income of $2,000,000.

Yearly Gross Overhead

This is calculated as the sum of all yearly estimates for each overhead line item. See your Ranch House Estimate as an example.

Yearly Gross Wages

This is calculated as the sum of the Total Net Annual Payroll Amount for each employee from the Wage tab of your estimating workbook. See your Ranch House Estimate as an example.

Overhead as a Percentage of Income

Calculate this figure by dividing your Estimate Yearly Gross Overhead by your Estimated Yearly Gross Income ($2,000,000).

Overhead, Profit, & Sales Tax %

Please note the following points, then enter the correct numbers in the Summary tab of the Small Cottage Estimating Workbook.

• Enter the number you calculated on the Overhead tab for Overhead as a Percentage of Income.
• Your construction company has asked you to complete the Small Cottage estimate based on a 10% profit figure.
• Idaho sales tax is 6%.

Recommended Guidelines for Adjusting Costs for Overhead, Profit, and Sales Tax

Recommended Guidelines for Overhead

• No overhead for costs and fees for the project that do not require the labor of company employees (eg. Architecture, Jobsite Facilities, etc.)
• No overhead for materials. Instead, make up overhead costs on the labor costs.
• Charge overhead for all labor costs.
• Charge overhead for all subcontractor costs because a company employee will bid level and will be onsite to supervise the work.
• Charge overhead for all allowance items because company employees will be buying the material and installing it.

Recommended Guidelines for Profit

• No profit for costs and fees for the project that do not require the labor of company employees (eg. Architecture, Jobsite Facilities, etc.)
• No profit for materials.
• Charge profit for all labor costs.
• Charge profit for all subcontractor costs because a company employee will be onsite to supervise the work.
• Charge profit for all allowance items because company employees will be buying the material and installing it.

Guidelines for Adding Sales Tax to Line Items

Sales tax must be paid. It is the law.

• Add sales tax to all materials, fees, and allowances.
• Do not add sales to to labor items.
• Add sales tax for special line items with especially large tax loads (eg. Real Estate Fees)

Remember, sales tax must be accounted for and paid by someone. If it is not included in line items as outlined above, the client will not pay them. In this scenario the construction company will pay sales tax, which will cut into profit.

How to Calculate Overhead, Profit, and Sales Tax in the Estimating Workbook

The Summary tab includes a total of each subsection of each construction phase. Within those tables are columns for Overhead, Profit, and Sales Tax.

To add adjustments to a line item for Overhead, Profit, and/or Sales Tax, add an "x" into the the provided space in the column for each respective adjustment. The calculation will be completed and added to the total cost for the line item.

Example

In the following example, notice that the columns for Overhead, Profit, and Sales Tax that include an "x" include a calculation based on the respective percentages in the Summary tab heading, and that a total is for each line item is calculated.