A Florida project has total expected revenue of $1,480,000 and total expected cost of $1,110,000. If the job is 45% complete, what gross profit is earned to date?
Correct Answer
A) $166,500
Total expected gross profit is $370,000. At 45% complete, earned gross profit is $166,500.
Why This Is the Correct Answer
Total expected gross profit is $370,000. At 45% complete, earned gross profit is $166,500.
Why the Other Options Are Wrong
Option B: $148,000
$148,000 is below the supported result for earned gross profit; it likely uses the wrong base, period, or account bucket.
Option C: $185,000
$185,000 is above the supported result for earned gross profit; it likely adds an unsupported amount or compares the wrong financial base.
Option D: $222,000
$222,000 is above the supported result for earned gross profit; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Accountant Verifying money test: bucket before math for earned gross profit.
Reference Hint
Open-book path: tab Builder's Guide to Accounting, 2001 to Section One, Accounting Methods, Percentage-of-Completion Method; use the job ledger figures in the stem and recompute the same accounting measure.
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