A $50,000 flooring allowance is included in the contract. The approved actual flooring cost is $43,500. What contract adjustment reconciles the allowance before markup terms?
Correct Answer
B) $6,500 deduct
The actual cost is $50,000 - $43,500 = $6,500 below the allowance, so the reconciliation is a $6,500 deduct before any contract markup terms. Other choices reverse the direction or use the full allowance.
Why This Is the Correct Answer
The actual cost is $50,000 - $43,500 = $6,500 below the allowance, so the reconciliation is a $6,500 deduct before any contract markup terms. Other choices reverse the direction or use the full allowance.
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