Exhibit 18-2 the Following Information Relates to a Project of the Sarasota

question 38

Multiple Choice

Exhibit 18-2 The following information relates to a project of the Sarasota Construction Company:
$\begin{array}{llll}&2010&2011&2012\\\text { Construction costs incurred } & \$ 136,000 & \$ 546,500 & \$ 200,000 \\\text { Estimated costs to complete } & 714,000 & 227,500 & --\end{array}$

The contract price was $1, 000, 000.Sarasota used the percentage-of-completion method of revenue recognition.
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Refer to Exhibit 18-2.What amount of gross profit was recognized in 2012?

• A)$ 29, 375
• B)$ 50, 000
• C)$117, 500
• D)$150, 000

Understand the concepts of opportunity, fixed, variable, and step-variable costs and how they behave.

Identify the cost behavior in terms of variable and fixed costs and the impact of activity level changes on these costs.

Delineate the concepts of committed fixed costs and the relevant range for cost behavior analysis.

Analyze and classify costs into variable and fixed based on an account analysis.

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Definitions:

Rapid Movements

Quick, fast actions or motions, which can be physical movements of the body or parts of the body.

Horizontal

Oriented parallel to the ground or to the bottom and top edges of something, as opposed to vertical.

Vertical

Oriented upward, perpendicular to the horizon or a horizontal plane.

Rotary

Refers to something revolving around a center or axis, such as a rotary engine or a rotary dial.