A remaining contract balance is $420,000 and expected remaining cost is $315,000. What remaining gross profit is in backlog?
Correct Answer
B) $105,000
Remaining gross profit equals remaining revenue less remaining cost, or $105,000.
Why This Is the Correct Answer
Remaining gross profit equals remaining revenue less remaining cost, or $105,000.
Why the Other Options Are Wrong
Option A: $95,000
$95,000 is below the supported result for backlog gross profit; it likely uses the wrong base, period, or account bucket.
Option C: $115,000
$115,000 is above the supported result for backlog gross profit; it likely adds an unsupported amount or compares the wrong financial base.
Option D: $125,000
$125,000 is above the supported result for backlog gross profit; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Backlog Gross Profit drawer for Owner Reviewing: label remaining before counting dollars.
Reference Hint
Open-book path: tab Builder's Guide to Accounting, 2001 to Section One, Planning for Profits, The Relationship Between Volume and Profit; use the job ledger figures in the stem and recompute the same accounting measure.
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