A Winter Haven contract price is $1,765,000 and current estimated total cost is $1,323,750. What estimated gross profit is in the WIP schedule?
Correct Answer
B) $441,250
Estimated gross profit is contract price less estimated total cost.
Why This Is the Correct Answer
Estimated gross profit is contract price less estimated total cost.
Why the Other Options Are Wrong
Option A: $3,088,750
$3,088,750 is above the supported result for estimated gross profit; it likely adds an unsupported amount or compares the wrong financial base.
Option C: $-441,250
$-441,250 is not aligned with the supported result for estimated gross profit; it has the wrong label or classification even if the number looks close.
Option D: $220,625
$220,625 is below the supported result for estimated gross profit; it likely uses the wrong base, period, or account bucket.
Memory Technique
Gross and profit live in different drawers; Controller Reviews 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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