Job Cost Estimate - exercise 2007

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					Job Cost Estimates                                                                    Introduction
                                    Job Cost Estimates

A job cost estimate is a special form of an enterprise budget. A job cost estimate is a listing
of all costs (variable & fixed) associated with a particular job, situation, or enterprise. Job
cost estimates used in the landscape and agribusiness industries, but they can be used for
production agriculture, too. They are useful in determining the cost, or bid price, for a job.

There are 4 sections to a job cost estimate: Machinery, Labor, Materials, and Overhead.
Similar to an enterprise budget, you list all of the machinery, labor, and materials that are to
be used in this job (enterprise). Then, add a portion of your overhead costs (costs that are
hard to allocate to a specific portion of your business, such as utilities, office rent,
administrative salaries, etc.) to estimate the total cost of the job. This total cost can be used
to determine breakeven prices and yields, bid prices, and/or expected profits from the job or


Ric Flair is a cow-calf operator who also operates a small landscaping firm. Truth be known,
he earns more from the landscaping business than the cow herd. Ric has decided to submit a
bid for a landscaping job at the corporate headquarters of Binford Tool, Inc. The job involves
weekly mowing of the lawns, upkeep of the planters and flower beds, and installation of new
planters. The following machinery, labor and materials will be required by this job:

   Machinery                                         Cost/unit      Units
      36” self-propelled mower                       $2.40/hr      130 hours
      20” push mower                                 $0.50/hr       60 hours
      Weedeater                                      $1.50/hr       80 hours
      Cyclone spreader                               $0.40/hr       20 hours
      3/4 ton pickup truck                           $8.75/hr       20 hours
      Flatbed trailer                                $2.80/hr       20 hours
   Labor (includes 20% efficiency factor)
      Bob - mowing, spreading                        $6.50/hr      250 hours
      Joanie - mowing, installation/upkeep           $8.00/hr      150 hours
      Sammy - mowing, supervising                    $9.00/hr      100 hours
      Railroad ties                                  $4.00/tie      50 ties
      Hardware, supplies                             $250
      Fertilizer                                     $60
      Mulch                                          $1.50/ft3      30 ft3
      Plant Materials                                $500

   Overhead - 25% of Total Direct Costs
   Contingencies (Fudge Factor, Ripple Effect)          2% of Total Direct Costs

Job Cost Estimates                                                   Introduction
                                Job Cost Estimate

Job:                                                  Date:

Machinery Costs:                  Cost/Unit       Units       Cost

A. Total Machinery Costs

Labor Costs:                      Cost/Hour       Hours       Cost

B. Total Labor Costs

Materials Costs:                  Cost/Unit      Quantity     Cost

C. Total Materials Costs

D. Total Direct Costs (Lines A + B + C)

E. Guarantee Costs

Overhead & Contingencies:

F. Total Overhead & Contingencies Costs

Total Job Cost Estimate (Lines D + E + F)

1. Desired Profit Margin Percentage
      Minimum Bid for Job
2. Desired Cost Markup Percentage
      Minimum Bid for Job
3. Expected Revenues
      Expected Return above Total Costs

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