Use the Following Information for Questions

question 48

Multiple Choice

Use the following information for questions.
Kiner, Inc.began work in 2010 on a contract for $8,400,000.Other data are as follows:

-If Kiner uses the percentage-of-completion method, the gross profit to be recognized in 2010 is

• A)$1,440,000.
• B)$1,600,000.
• C)$2,160,000.
• D)$2,400,000.

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Definitions:

Overhead Budget

A financial plan that estimates the expected overhead costs for a business over a certain period.

Indirect Materials

Materials used in the production process that cannot be directly linked to specific products or are not significant enough to warrant tracing to individual products, such as lubricants for machinery.

Indirect Labour

Labor costs associated with employees who support the production process but do not directly work on the production of goods or services, such as maintenance staff and supervisors.

Program Budgeting

A budgeting system that allocates resources based on the planning and control of specific programs or projects.