Exhibit 18-3 On January 1, 2010, Dunedin Co.sold 100 contracts at $500 each.Each contract permitted the buyer to use a repair bay six times and a paint bay nine times.
Additional information:
$\begin{array} { l l l }
\text { Initial direct costs } & \$ 5,000 & \
\text { Annual indirect costs } & 1,000 & \
\text { Direct cost per service act: } & & \
& \text { Repair } & 30 \
& \text { Paint } & 20
\end{array}$
In 2010, the repair bay was used 180 times and the paint bay was used 162 times.
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Refer to Exhibit 18-3.What net income (loss)should be recognized by Dunedin in 2010?

Question

Exhibit 18-3 On January 1, 2010, Dunedin Co.sold 100 contracts at $500 each.Each contract permitted the buyer to use a repair bay six times and a paint bay nine times.
Additional information: 
$\begin{array} { l l l } 
\text { Initial direct costs } & \$ 5,000 & \
\text { Annual indirect costs } & 1,000 & \
\text { Direct cost per service act: } & & \
& \text { Repair } & 30 \
& \text { Paint } & 20
\end{array}$
In 2010, the repair bay was used 180 times and the paint bay was used 162 times.
- 
Refer to Exhibit 18-3.What net income (loss)should be recognized by Dunedin in 2010?

Quizplus · Accepted Answer

The net income recognized by Dunedin in 2010 can be calculated as follows: - Revenue from contracts: 100 contracts * $500 = $50,000- Initial direct costs: $5,000- Annual indirect costs: $1,000- Direct cost for repair bay use: 180 times * $30 = $5,400- Direct cost for paint bay use: 162 times * $20 = $3,240Total costs = $5,000 + $1,000 + $5,400 + $3,240 = $14,640Net income = Revenue - Total costs = $50,000 - $14,640 = $35,360However, since none of the provided choices match the calculated net income, it seems there might have been a misunderstanding in the calculation or interpretation of the provided choices. The correct approach involves calculating the total revenue and subtracting all associated costs to find the net income. Given the discrepancy, it's important to carefully review the calculation steps and the assumptions made.

Exhibit 18-3 on January 1, 2010, Dunedin Co In 2010, the Repair Bay Was Used 180 Times and at $500