The Records of a Construction Company Provided the Following Data

question 10

Essay

The records of a construction company provided the following data on along-term construction contract (3 years), which was just completed.
Construction contract price. $1,425,000
Estimated total cost (at start). $1,200,000 $\begin{array} { | l | l | l | l | } \hline & \text { At end of 2001 } & \text { At end of 2002 } & \text { At end of 2003 } \\\hline \text { Costs incurred to date: } & & & \\\hline \text { (cumulative) } & \$ 300,000 & \$ 480,000 & \$ 1,245,000 \\\hline \text { Estimated cost to complete } & 900,000 & 750,000 & \text { Completed } \\\hline \text { Progress billings to date: } & & & \\\hline \text { (cumulative) } & 240,000 & 465,000 & 1,425,000 \\\hline \text { Progress collections to date: } & & & \\\hline \text { (cumulative) } & 210,000 & 450,000 & 1,425,000 \\\hline\end{array}$ Complete the following partial financial statements for each year (assume percentage-of-completion is based on costs incurred to total costs) (Hint: complete CC for all years, then complete PC)*:

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Definitions:

Short-Run

A period during which at least one input, typically capital, is fixed, influencing the flexibility of businesses to adjust to market changes.

Marginal-Cost Curve

A graphical representation showing how the cost of producing one additional unit of a good varies as the quantity of production changes.

Additive Manufacturing

A method that involves building items by depositing material in successive layers, widely referred to as 3D printing.

Fixed Set-Up Costs

Initial costs that do not vary with the level of production or sales, such as equipment purchases or facility leases, needing to be paid before production starts.