When the Cost Basis Is Used to Calculate the Percentage

question 19

Multiple Choice

When the cost basis is used to calculate the percentage of completion,cost items that may need adjustment include:

• A) discounts for the bulk purchase of construction materials.
• B) gains and losses on foreign currency translation.
• C) materials delivered and paid for, but not yet used.
• D) interest charges on late payments for materials and other items used in the construction project.

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Definitions:

Depreciation Expense

The allocated amount of the cost of an asset over its useful life, reflecting wear and tear or obsolescence.

Tax Rate

The income proportion taken as tax from either individuals or corporations.

Variable Cost

Expenses that fluctuate in direct proportion to the volume of production or commercial operations.

Contribution Margin

The amount by which the sale of a product or service exceeds its production cost, used to cover fixed costs and generate profit.