Using the Cost Method to Calculate the Percentage of Completion,the

question 67

Multiple Choice

Using the cost method to calculate the percentage of completion,the formula for the current period revenue or gross profit to be recognised is:

• A) costs incurred to the end of the current period divided by most recent estimate of total costs.
• B) estimated total revenue or gross profit from the contract multiplied by (costs incurred to the end of the current period divided by most recent estimate of total costs) less (total revenue or gross profit recognised in prior periods).
• C) costs incurred to the end of the current period divided by most recent estimate of total costs multiplied by (total revenue or gross profit recognised in prior periods).
• D) estimated total revenue or gross profit from the contract divided by (costs incurred to the end of the current period multiplied by most recent estimate of total costs) less (total revenue or gross profit recognised in prior periods).

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Definitions:

Utilitarian Organizations

are groups formed to achieve specific objectives, often for compensation, such as businesses or government agencies.

Ideal Bureaucracies

Theoretical models of organizational structures designed to operate efficiently and rationally through clear hierarchies and rules.

Informal Culture

Refers to the unwritten, unspoken norms, behaviors, and practices that develop organically within social groups, outside formal institutions.

Formal Organizations

Structured groups established for a specific set of objectives or tasks, characterized by clear hierarchies and rules.