Use the information below to answer the following questions:
Highrise Constructions Ltd had a large 3-year project with total revenue of $5,000,000 and estimated total costs of $4 200,,000. The project was 25% complete at the end of the first year, 55% complete at the end of the second year, and 100% complete at the end of the third year. Revenues and costs were as estimated.
-What 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 revenue and costs are recognized at the end of the project. Therefore, the profit earned during the third year is the total revenue minus the total costs: $5,000,000 - $4,200,000 = $800,000.

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