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Setler79 [48]
3 years ago
6

A construction company entered into a fixed-price contract to build an office building for $28 million. Construction costs incur

red during the first year were $8 million and estimated costs to complete at the end of the year were $12 million.The building was completed during the second year. Construction costs incurred during the second year were $13 million.How much revenue and gross profit or loss will the company recognize in the first and second year if it recognizes revenue upon contract completion
Business
1 answer:
Radda [10]3 years ago
4 0

Answer:

$3.2 million

Explanation:

The revenue and gross profit or loss which the company identify in the first and second year if it recognizes revenue upon contract completion is calculated below.

Total costs = Incurred costs + estimated costs to complete = $8 million + $12 million = $20 million

Revenue to recognize = $8m/$20m*$28m = $11.2 million

Gross Profit = Revenue recognized less costs incurred

= $11.2m - $8m = $3.2 million

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Answer: Description, Date, and Amount. 

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Your company is considering a new project that will require $10,000 of new equipment at the start of the project. The equipment
zmey [24]

Answer:

Estimate the present value of the tax benefits from depreciation:

D. $1,851

Explanation:

<em>Step 1: Determine annual depreciation</em>

A.D=(A.C-S.V)/N

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A.D=annual depreciation

A.C=acquisition cost

S.V=salvage value

N=useful life

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A.D=unknown, to be determined

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replacing;

A.D={(10,000-3,000)/5}=7,000/5=$1,400

Annual depreciation=$1,400

<em>Step 2: Determine annual tax benefits</em>

Annual tax benefits=tax rate×annual depreciation

where;

tax rate=34%=34/100=0.34

annual depreciation=$1,400

replacing;

Annual tax benefits=0.34×1,400=$476

<em>Step 3: Determine present value of the annual tax benefits</em>

Year                  Future value                Present value

 1                          476                            476/{(1+0.09)^1}=436.70

 2                         476                            476/{(1+0.09)^2}=400.64

 3                         476                            476/{(1+0.09)^3}=367.56

 4                         476                            476/{(1+0.09)^4}=337.21

 5                         476                            476/{(1+0.09)^5}=309.37

Total present value of the tax benefits=436.70+400.64+367.56+337.21+309.37=$1,851.48

Estimate the present value of the tax benefits from depreciation=$1,851

3 0
3 years ago
Matthew​ Liotine's Dream Store sells water beds and assorted supplies. His​ best-selling bed has an annual demand of 395 units.
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Answer:

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Explanation:

Data provided in the questions

Annual demand = 395 units

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The computation of the economic order quantity is shown below:

= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}

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We simply applied the above formula so that approximate units could come. And it always expressed in units

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Answer:

E. High manufacturing cost

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7 0
3 years ago
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