When processing a payment application, a contractor notices that 15% of the work claimed as complete is actually only 60% finished. If the application total is $200,000, what should the approved payment amount be?
Correct Answer
D) $188,000
15% of $200,000 = $30,000 claimed incorrectly. Actual completion: $30,000 × 0.60 = $18,000. Overstatement: $30,000 - $18,000 = $12,000. Approved amount: $200,000 - $12,000 = $188,000.
Why This Is the Correct Answer
Option C is correct because it properly calculates the overstatement in the payment application. When 15% of work ($30,000) is claimed as complete but is only 60% finished, the actual value is $18,000, creating a $12,000 overstatement. Subtracting this overstatement from the original application gives the correct approved amount of $188,000.
Why the Other Options Are Wrong
Option A: $170,000
This answer appears to use an incorrect calculation method, possibly subtracting 9% instead of calculating the actual overstatement based on the completion percentage.
Option C: $182,000
This answer incorrectly subtracts the full 15% ($30,000) from the application total, ignoring that 60% of that work was actually completed and should still be paid.
Memory Technique
Remember 'DAD': Disputed amount, Actual completion, Difference to subtract. This ensures you don't forget to account for the partially completed work.
Reference Hint
Florida Building Code Chapter 1, Section 109 - Fees and Permits, or AIA A201 General Conditions Article 9 - Payments and Completion
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