Timing of Revenue Recognition/percentage of Completion

question 5

Essay

Timing of revenue recognition/percentage of completion
Crush Inc. provides demolition services. In order to determine the progression of its projects, the company could use several measures, including estimated labour hours, total machine hours, and output of material demolished. A project Crush currently has underway has taken 400 labour hours, 900 machine hours, and 2,000 tons of material output. The estimated total resources required (and resulting outputs) for this project are 1,000 labour hours, 1,400 machine hours and 4,500 tons of materials.
Instructions
Consider the three alternative means of tracking percentage completion. Under each method, calculate the percentage-completion rate for this project.

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Definitions:

Fixed Costs

Fixed costs are business expenses that remain constant regardless of the level of production or sales activities, such as rent, salaries, and insurance.

Selling Price

is the amount of money for which a product or service is sold to customers.

Breakeven Analysis

It's a financial calculation to determine when a project or business will be able to cover all its costs and begin to make a profit.

Cost Control Measures

Strategies or actions taken by a company to maintain or reduce costs in order to improve profitability.