Highrise Constructions Ltd had a large three-year project with total revenue of $5 000 000 and estimated total costs of $4 200 000.The project was 25 per cent complete at the end of the first year,55 per cent complete at the end of the second year and 100 per cent complete at the end of the third year.Revenues and costs were as estimated.
- How much profit was earned during the third year if the completion of production method was used?
A) $360 000
B) $440 000
C) $800 000
D) $400 000

Question

Quizplus · Accepted Answer

Under the completion of production method, all revenues and costs are recognized at the end of the project. Therefore, the profit is calculated as total revenue minus total costs: $5,000,000 - $4,200,000 = $800,000.

Highrise Constructions Ltd Had a Large Three-Year Project with Total