Table $10\mathrm{.}1$ has been expanded on the eResource to show which types of work Evergreen Construction Company $($ECC$)$ performed with more or less direct labor and which types of work were generally negotiated versus bid. ECC is considering adding an additional home office annual warehouse cost of $$220,000$ to support their direct work activities and adding a marketing cost of $$130,000$ to support their negotiated projects. Assume that in the short term, neither of these potential additions affect revenue, but they will increase HOOH and subsequently reduce net profits. Utilize ABC to apply these contemplated additional costs to the divisions which they support most and recalculate the net profits for each. Table $10\mathrm{.}1$ Overhead spread on divisions and volume

$\backslash$begin$\{$tabular$\}\{|$c$|$c$|$c$|$c$|$c$|$c$|$c$|$c$|$c$|$c$|$c$|$c$|\}$

$\backslash$hline & & & & & & $\backslash$multicolumn$\{3\}\{|$c$|\}\{$Method I$\}$ & $\backslash$multicolumn$\{3\}\{|$c$|\}\{$Method $2\}\backslash \backslash$

$\backslash$hline Column: & I & $2$ & $3$ & $4$ & $5$ & $6$ & $7$ & $8$ & $9$ & $10$ & $11\backslash \backslash$

$\backslash$hline $\backslash$begin$\{$tabular$\}\{$l$\}$

Construction $\backslash \backslash$

Division

$\backslash$end$\{$tabular$\}$ & $\backslash$begin$\{$tabular$\}\{$l$\}$

Total $\backslash \backslash$

Volume $\backslash \backslash$

$\backslash$$ x I mil.

$\backslash$end$\{$tabular$\}$ & $\backslash$begin$\{$tabular$\}\{$l$\}$

Percent of $\backslash \backslash$

Total V

$\backslash$end$\{$tabular$\}$ & $\backslash$begin$\{$tabular$\}\{$l$\}$

Fee $\backslash \backslash$

Earned

$\backslash [$

$\backslash$$ $\backslash$times $1000$

$\backslash ]$

$\backslash$end$\{$tabular$\}$ & Fee Percent of Projects & Fee Percent of Total Fee & $\backslash$begin$\{$tabular$\}\{$l$\}$

HOOH $\backslash \backslash$

Proportioned by Division

$\backslash$end$\{$tabular$\}$ & $\backslash$begin$\{$tabular$\}\{$l$\}$

Profit after $\backslash \backslash$

HOOH

$\backslash$end$\{$tabular$\}$ & $\backslash$begin$\{$tabular$\}\{$l$\}$

Net $\backslash \backslash$

Profit $\backslash \backslash$

Percentage

$\backslash$end$\{$tabular$\}$ & $\backslash$begin$\{$tabular$\}\{$l$\}$

HOOH $\backslash \backslash$

Proportioned on Volume

$\backslash$end$\{$tabular$\}$ & $\backslash$begin$\{$tabular$\}\{$l$\}$

Profit after $\backslash \backslash$

HOOH

$\backslash$end$\{$tabular$\}$ & $\backslash$begin$\{$tabular$\}\{$l$\}$

Net $\backslash \backslash$

Profit $\backslash \backslash$

Percentage

$\backslash$end$\{$tabular$\}\backslash \backslash$

$\backslash$hline Real Estate & Nil & $0\backslash \%$ & $\backslash$$$0$ & $0\backslash \%$ & $0\backslash \%$ & $\backslash$$$445$ & $\backslash (-\backslash$$ $445\backslash )$ & $\backslash (-45\mathrm{.}0\backslash \%\backslash )$ & $\backslash$$$0$ & $\backslash$$$0$ & $0\mathrm{.}0\backslash \%\backslash \backslash$

$\backslash$hline Commercial & $\backslash$$$75\mathrm{.}8$ & $78\backslash \%$ & $\backslash$$$2,679$ & $\backslash (3\mathrm{.}5\backslash \%\backslash )$ & $73\backslash \%$ & $\backslash$$$445$ & $\backslash$$$2,234$ & $2\mathrm{.}9\backslash \%$ & $\backslash$$$1,392$ & $\backslash$$$1,287$ & $1\mathrm{.}7\backslash \%\backslash \backslash$

$\backslash$hline Industrial & $\backslash (\backslash$$ $18\mathrm{.}7\backslash )$ & $19\backslash \%$ & $\backslash$$$882$ & $4\mathrm{.}7\backslash \%$ & $\backslash (24\backslash \%\backslash )$ & $\backslash$$$445$ & $\backslash$$$437$ & $2\mathrm{.}3\backslash \%$ & $\backslash$$$344$ & $\backslash$$$538$ & $2\mathrm{.}9\backslash \%\backslash \backslash$

$\backslash$hline Tenant Improvement & $\backslash$$$2\mathrm{.}5$ & $\backslash (3\backslash \%\backslash )$ & $\backslash$$$116$ & $4\mathrm{.}6\backslash \%$ & $\backslash (3\backslash \%\backslash )$ & $\backslash$$$445$ & $\backslash (-\backslash$$ $329\backslash )$ & $\backslash (-13\mathrm{.}2\backslash \%\backslash )$ & $\backslash$$$46$ & $\backslash$$$70$ & $2\mathrm{.}8\backslash \%\backslash \backslash$

$\backslash$hline $\backslash$multirow$[$t$]\{2\}\{*\}\{$Totals:$\}$ & $\backslash (\backslash$$ $97\mathrm{.}0\backslash )$ & $100\backslash \%$ & $\backslash$$$3,677$ & $3\mathrm{.}8\backslash \%$ & $100\backslash \%$ & $\backslash$$$1,782$ & $\backslash$$$1,895$ & $2\mathrm{.}0\backslash \%$ & $\backslash$$$1,782$ & $\backslash$$$1,895$ & $2\mathrm{.}0\backslash \%\backslash \backslash$

$\backslash$hline & $\backslash$$ $\backslash (\backslash$times $1\backslash )$ mil & & $\backslash$$ x I,$000$ & & & $\backslash$$ x $1,000$ & $\backslash$$ x $1,000$ & & $\backslash$$ $\backslash (\backslash$times $1,000\backslash )$ & $\backslash$$ $\backslash (\backslash$times $1,00\backslash )$ & $\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{3\}\{|$l$|\}\{$Total Fee as percent of total volume:$\}$ & $\backslash (3\mathrm{.}8\backslash \%\backslash )$ & & & $\backslash$multicolumn$\{6\}\{|$l$|\}\{$Method I: Overhead spread evenly for each of the four divisions$\}\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{3\}\{|$l$|\}\{$Total Home Office Overhead Cost:$\}$ & $\backslash (\backslash$$ $1,781,921\backslash )$ & annually & & $\backslash$multicolumn$\{6\}\{|$l$|\}\{$Method $2$: Overhead spread based on each division's volume$\}\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{3\}\{|$l$|\}\{$Overhead as percent of total volume:$\}$ & $\backslash (1\mathrm{.}8\backslash \%\backslash )$ & & & & & & & & $\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{3\}\{|$l$|\}\{$Net Profit:$\}$ & $\backslash$$$1,895,079$ & $\backslash (2\mathrm{.}0\backslash \%\backslash )$ & & & & & & & $\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$