A $35,000 allowance is reconciled to an approved cost of $41,800. What contract increase is needed before markup terms?
Correct Answer
C) $6,800
Allowance overrun is $41,800 - $35,000 = $6,800.
Why This Is the Correct Answer
Allowance overrun is $41,800 - $35,000 = $6,800.
Why the Other Options Are Wrong
Option A: $5,800
allowance overrun, choice a: $5,800 is wrong because $5,800 takes one allowance-side amount as the adjustment.
Option B: $35,000
allowance overrun, choice c: $35,000 takes one allowance-side amount as the adjustment.
Option D: $76,800
allowance overrun, choice d: $76,800 is wrong because $76,800 takes one allowance-side amount as the adjustment.
Memory Technique
Say the allowance overrun rule aloud as a chain; the chain ends at $6,800, not an intermediate stop.
Reference Hint
Open NASCLA Contractors Guide to Business, Law and Project Management, 14th Ed.; use the index entry or section for "allowance reconciliation" to confirm that Allowance overrun is $41,800 - $35,000 = $6,800.
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