Pool Contractors (PC)entered into a Contract to Build a Solar

question 8

Multiple Choice

Pool Contractors (PC) entered into a contract to build a solar heated swimming complex for $1,800,000. Construction commenced on July 1, 2011, with a planned completion date of December 31, 2013. A summary of the related accounting information is provided below: How much gross profit would be recognized in fiscal 2012 if PC uses the percentage of completion method?

• A)$50,000
• B)$100,000
• C)$130,000
• D)$180,000

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Definitions:

Income From Operations

Earnings generated from a company's regular, core business operations, excluding deductions of interest and taxes.

Income From Operations

Revenue from a company's primary business activities, excluding costs and expenses.

Transfer Price

The price at which goods and services are transferred between departments or related entities within the same organization.

Variable Costs

Costs that vary directly with the level of production or business activity, such as materials and labor costs.