You spend $5 on materials to make a scarf. You think you have added $10 of value, so you set the price to $15. Nobody buys the s
2 answers:
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Answer: $750,000
Explanation:
Given that,
Fixed price contract = $10,000,000
Cost incurred in the first year = $3,000,000
Remaining costs to complete = $5,000,000
Tullis billed = $4,000,000 in year 1
Collected by the end of the year = $3,500,000
Percentage of work completed =
=
= 37.5%
Revenue recognized = 37.5% of $10,000,000
= $3,750,000
Income recognized = Revenue recognized - Cost incurred in the first year
= $3,750,000 - $3,000,000
= $750,000
Answer: $15,909.09
Explanation:
Nominal GDP is the value of goods and services that is calculated on the basis of current year prices whereas Real GDP is the value of goods and services that is determined on the basis of Base year prices. If we are using the identical price for both the years for calculating GDP then we can see the increment in the current year GDP from the last year. This means that the quantity of goods produced in the current year is larger than the last year. That's why it is important to use Real GDP rather than Nominal GDP.
Given that,
Nominal GDP (millions of dollars) = $14000
Price level (GDP deflator) = 88
Real GDP = 159.09 × 100
= $15,909.09
Hence, Real GDP = $15,909.09.
Therefore, Real GDP is greater than Nominal GDP hence we can say that the amount of good produced is worth more than $14,000.