Answer:
a. $234,000
b. $239,000
Explanation:
a. The transaction price is
= Construction cost + Performance bonus on the time of completion × project complete on time percentage + performance bonus after one week × one week late percentage + performance bonus after two week × two week late percentage
= $200,000 + $40,000 × 0.55 + $30,000 × 0.30 + $20,000 × 0.15
= $200,000 + $22,000 + $9,000 + $3,000
= $234,000
b. The transaction price is
= Construction cost + Performance bonus on the time of completion × project complete on time probability + performance bonus after one week × one week late probability
= $200,000 + $40,000 × 90% + $30,000 × 10%
= $200,000 + $36,000 + $3,000
= $239,000
The after one week is
= $40,000 - $10,000
= $30,000
The after two week is
= $40,000 - $10,000 - $10,000
= $20,000
