Brutus Construction
Brutus Construction Started Work on a New High

question 128

Essay

Brutus Construction
Brutus Construction started work on a new high rise building on January 1, 2019, The project completion date is December 2021. The contract price is $54,000,000. The following are the actual costs incurred and estimates of cost to complete the project.
$$\begin{array} { r c c } \text { Years } & \text { Actual costs incurred } & \text { Estimated costs to complete } \\2019 & \$ 15,000,000 & \$ 30,000,000 \\2020 & 22,500,000 & 22,500,000 \\2021 & 17,500,000 & - 0 -\end{array}$$
-Refer to Brutus Construction. Calculate gross profit or loss for 2019, 2020 and 2021 using the percentage of completion method.

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Definitions:

Conversion Costs

The combination of direct labor and manufacturing overhead costs that are incurred to convert raw materials into finished products.

Weighted-Average Method

An inventory costing method that averages the cost of inventory available for sale with the cost of goods sold to determine the cost of ending inventory and cost of goods sold.

Welding Department

A specialized segment within a manufacturing facility where welding processes are conducted, often accounted for separately in cost and production analyses.

Weighted-Average Method

The weighted-average method is an inventory costing method that assigns a weighted average cost to the inventory items based on the cost of goods available for sale and the units available.