Camey Construction Enters into a Long-Term Fixed Price Contract to Build

question 70

Multiple Choice

Camey Construction enters into a long-term fixed price contract to build an office building for $8,000,000. In the first year of the contract Camey incurs $1,000,000 of cost and the engineers determined that the remaining costs to complete are $2,200,000. Camey billed $1,700,000 and collected $1,400,000 in Year 1. Refer to Camey Construction. How much gross profit should Camey recognize in Year 1 assuming the use of the percentage-of-completion method? (Do not round intermediary calculations, and round your final answer to the nearest whole dollar.)

• A) $1,500,000
• B) $531,250
• C) $7,000,000
• D) $8,000,000

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Definitions:

Probability

A measure of how likely an event is to occur, ranging from 0 (impossible event) to 1 (certain event).

Union

An organized association of workers formed to protect and further their rights and interests; or, in mathematics, the set containing all the distinct elements of some given sets.

Dependent Events

Events where the outcome or occurrence of the first affects the outcome or occurrence of the second.

Independent Events

Two or more events where the occurrence of one event does not affect the probability of the other(s).