A Florida job has expected revenue of $1,760,000 and expected cost of $1,320,000. If it is 25% complete, what gross profit is earned to date?
Correct Answer
B) $110,000
Total expected gross profit is $440,000. One quarter of that amount is $110,000.
Why This Is the Correct Answer
Total expected gross profit is $440,000. One quarter of that amount is $110,000.
Why the Other Options Are Wrong
Option A: $88,000
$88,000 is below the supported result for earned gross profit; it likely uses the wrong base, period, or account bucket.
Option C: $132,000
$132,000 is above the supported result for earned gross profit; it likely adds an unsupported amount or compares the wrong financial base.
Option D: $176,000
$176,000 is above the supported result for earned gross profit; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Expected and dollars live in different drawers; Accountant Checks tells which opens.
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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