In Early 2010, the Miami Company Signed a Contract for Construction

question 14

Multiple Choice

In early 2010, the Miami Company signed a contract for construction of an industrial park to be completed in three years.At that time, estimated total costs were $2, 250, 000, and estimated total revenues were $4, 000, 000.During 2010, Miami incurred costs of $960, 000 and collected $1, 100, 000.In December 2010, Miami recalculated total costs for the project to be $3, 200, 000 while estimated total revenues remained unchanged.What amount of profit (loss) should be recognized by Miami for 2010, using the percentage-of-completion method?

• A)$266, 667 profit
• B)$ 55, 000 loss
• C)$240, 000 profit
• D)$285, 000 loss

Understand the concept of the relevant range and its application to costs.

Understand the difference and importance of the contribution margin in cost-volume-profit analysis.

Differentiate between traditional and contribution format income statements.

Recognize the significance of opportunity costs and sunk costs in decision-making.

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Definitions:

Federal Income Tax Return

A document filed with the IRS reporting annual income, taxes owed, and any potential refunds for a person or entity in the United States.

Capital Contribution

Financial investment made by an owner or shareholder to provide funding to a business, often in exchange for equity.

ULPA

Stands for Uniform Limited Partnership Act, which is a statute that standardizes the laws governing limited partnerships in certain jurisdictions.

Limited Partnership

A business structure where one or more partners have limited liabilities, and at least one partner has unlimited liability.