Messersmith Company is constructing a building.Construction began in 2010 and the building was completed 12\31\10.Messersmith made payments to the construction company of $1,000,000 on 7\1, $2,100,000 on 9\1, and $2,000,000 on 12\31.Average accumulated expenditures were

Question

Quizplus · Accepted Answer

The average accumulated expenditures are calculated as the sum of all the payments made during the construction period divided by the number of months of construction:
($1,000,000 + $2,100,000 + $2,000,000) / 3 = $1,700,000
Since the building was completed on 12/31/10, the construction period was only 6 months (July-December), so the average accumulated expenditures per month are:
$1,700,000 / 6 = $283,333.33
Therefore, the best choice is B) $1,200,000, which is the closest to the calculated value.

Messersmith Company Is Constructing a Building