Assume that Playground Corp. has agreed to construct a new playground for Township County for $2,300,000 dollars. Construction of the new playground will begin on March 17, 2007 and is expected to be completed in August 2008. At the signing of the contract Playground Corp. estimates that the it will cost $1,600,000 dollars to build the playground. At the end of 2007 Playground provided the following information about the project:
What percentage is playground complete?
A) 62.5%
B) 43.5%
C) 55.6%
D) 50.0%

Question

Assume that Playground Corp. has agreed to construct a new playground for Township County for $2,300,000 dollars. Construction of the new playground will begin on March 17, 2007 and is expected to be completed in August 2008. At the signing of the contract Playground Corp. estimates that the it will cost $1,600,000 dollars to build the playground. At the end of 2007 Playground provided the following information about the project:
 What percentage is playground complete?
A) 62.5% 
B) 43.5% 
C) 55.6% 
D) 50.0%

Quizplus · Accepted Answer

To determine the percentage of completion, we need to use the cost-to-cost method, which is calculated by dividing the actual cost of work completed to date by the total estimated cost of the project. Based on the information provided, Playground Corp. has spent $1,075,000 by the end of 2007. Dividing this by the estimated total cost of $1,937,500 ($1,600,000 + (($2,300,000 - $1,600,000) × 40%)), we get 55.6%. Therefore, the correct answer is C.

Assume That Playground Corp