A job has a contract value of $500,000 with costs to date of $300,000 and estimated costs to complete of $150,000. Using the percentage-of-completion method, what percentage of the job is complete?
Correct Answer
C) 67%
Percentage complete = Costs to date ÷ Total estimated costs. Total estimated costs = $300,000 + $150,000 = $450,000. $300,000 ÷ $450,000 = 66.7% or approximately 67%.
Why This Is the Correct Answer
The percentage-of-completion method calculates project completion based on costs incurred versus total estimated costs, not contract value. The formula is: Costs to date ÷ Total estimated costs. Total estimated costs equals costs to date ($300,000) plus estimated costs to complete ($150,000) = $450,000. Therefore, $300,000 ÷ $450,000 = 0.667 or 67%.
Why the Other Options Are Wrong
Option B: 80%
75% appears to use an incorrect total cost figure, possibly excluding some costs or using the wrong denominator in the calculation.
Option D: 60%
60% incorrectly uses the contract value in the calculation ($300,000 ÷ $500,000 = 60%), but percentage-of-completion is based on costs, not contract value.
Memory Technique
Remember 'CTC' - Costs To Complete: Add costs to date + costs to complete for your denominator, then divide costs to date by that total.
Reference Hint
Look up 'Percentage-of-Completion Method' or 'Project Accounting' in construction management or accounting sections of your reference materials.
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