TOTAL COST METHOD In its simplest form, the total cost method allows a claimant to establish damages by calculating

the difference between its actual costs of performance, plus profit, and the contract price/bid amount. This method is very helpful to contractors because in complex construction matters it is often difficult to quantify the actual damages resulting from a delay or disruption. The United States Court of Claims has established four criteria that a claimant must satisfy before it can use the total cost method:

1. The nature of the losses makes it impossible or highly impracticable to determine them with a reasonable degree of accuracy.
The first criterion for using the total cost method is that there are no other practicable means of measuring damages. The claimant must prove that its additional costs (resulting from the owner's actions) cannot be measured with any reasonable accuracy.

2. The contractors bid or estimate was realistic.

The second criterion for using the total cost method is to establish that the claimant's bid or estimate is realistic. To satisfy this criterion, courts have typically required a claimant to show that it was diligent in preparing its bid and that the bid was within the range of other bids submitted for the project.

3. The contractors actual costs were reasonable. The third criterion for using the total cost method is that the claimant's actual costs were reasonable. The reasonableness of a claimant's actual costs generally is the easiest of the criteria to establish. Courts typically require a contractor to demonstrate that it acted reasonably in incurring its additional costs. Contractors generally will attempt to satisfy this requirement through the use of expert testimony and reliance on industry standards. 4. The contractor was not responsible for the added expenses.
The final and most difficult criterion for using the total cost method is that the claimant was not responsible for the additional costs incurred. This criterion is based on the contractual principle that damages are awarded only for costs incurred as a result of defendant's breach. These four safeguards make it difficult to use a total cost approach. Perhaps the best time to use a total cost approach is when a project is so disrupted that the contractors entire performance is far different than expected. In situations such as these, the base contract work becomes so intermingled with the changed work that it is virtually impossible to use any other pricing method. Los costos que incluye el costeo por absorcin son:

Materiales directo, Mano de obra directa, costos indirectos de fabricacin fijos, costos indirectos de fabricacin variables, se convierten en costos cunado el producto se vende. El costeo por absorcin tambin toma como costos del producto costos de depreciacin de maquinaria, arriendo, seguros, impuestos de produccin, Los Costos variables se cargan al producto y se cancelan como costos del periodo. El costeo por absorcin utiliza el estado de resultados tradicional tambin llamado estado de resultados de contribucin clasifica los gastos por su funcin como administracin, ventas y produccin, genera el margen bruto. Margen bruto (utilidad bruta): Exceso de ventas sobre el costo de inventarios de la mercanca vendida, se genera en el costeo por absorcin. Margen de contribucin: exceso de ventas sobre todos los gastos variables incluyendo las categoras variables de produccin, ventas y administracin, se da en el mtodo de costeo Directo o Variable, los costos fijos no afectan el margen de contribucin, afectan el estado de resultados del periodo en que se causan. Costeo Directo o variable: Simplifica y facilita los procedimientos contables, suministra las herramientas necesarias para la plantacin y el control de los costos, porque los costos variables y fijos se pueden identificar claramente. Estados financieros Costeo Directo: Estado de costos de productos vendidos, est integrado por los costos variables de produccin nicamente. Balance general: los inventarios de productos terminados y en proceso aparecen al costo variable del producto nicamente. Estado de rentas y gastos: al total de las ventas se le restan los gastos variables, para obtener el margen de contribucin (ingreso marginal), margen que dejan las ventas para contribuir a cubrir los gastos fijos de la empresa en el periodo respectivo. Si el margen de contribucin es superior al total de gastos fijos, se obtiene una ganancia, si no es una perdida. Utilidades en el costo directo, tienden a bajar proporcionalmente al volumen de ventas, con el costo total las utilidades depende de las ventas y del volumen de produccin, porque los inventarios mantiene capitalizados los costos fijos de produccin.