Use the Following Information for Questions

question 30

Multiple Choice

Use the following information for questions.The contract calls for progress billings and payments of $620,000 each quarter.The total contract price is $7,440,000 and Seasons estimates total costs of $7,100,000.Seasons estimates that the building will take 3 years to complete, and commences construction on January 2, 2010.
-At December 31, 2011, Seasons Construction estimates that it is 75% complete with the building; however, the estimate of total costs to be incurred has risen to $7,200,000 due to unanticipated price increases.What is the total amount of Construction Expenses that Seasons will recognize for the year ended December 31, 2011?

• A)$5,400,000
• B)$3,150,000
• C)$3,195,000
• D)$3,270,000

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Definitions:

Sales Commissions

Earnings given to sales personnel based on the value or volume of sales they successfully complete.

Widgets

Generic term for a manufactured product or a user interface element in software applications that can be easily placed and configured within a system.

Liquidated Damages

A predetermined amount of money that must be paid as compensation if a party breaches a contract.

Penal

Relating to, involving, or prescribing a penalty, often used in the context of laws, regulations, or punishments.