Haven Corp $\quad$ $\quad$ $\quad$ $\quad$ $\quad$

question 59

Multiple Choice

Haven Corp. contracted to construct a building for $ 750,000. Construction began in 2020 and was completed in 2021. Data relating to the contract follow: $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Year ended
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ December 31 .

$\begin{array}{c}\begin{array}{lll}\text {Costs incurred.}\\\text {Estimated costs to complete} \end{array}\begin{array}{r} \underline{2020}\\\$ 300,000 \\200,000\end{array}\begin{array}{r} \underline{2021}\\\$ 230,000\\-\end{array}\end{array}$

Haven uses the percentage-of-completion method. For the calendar years 2020 and 2021, respectively, Haven should report gross profit of

• A) $ 135,000 and $ 85,000.
• B) $ 450,000 and $ 300,000.
• C) $ 150,000 and $ 70,000.
• D) $ 0 and $ 220,000.

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Definitions:

Total Revenue

The total income generated by a firm from the sale of its goods and services.

Price Elasticity

An index that measures the reaction of how much a good is wanted to a price adjustment of that good.

Midpoint Formula

A mathematical formula used to calculate the average or midpoint between two values on a line segment.

Total Revenue

The total receipts from sales of goods and services to customers; it is the unit price times the quantity of goods or services sold.