Gutierrez Company is constructing a building.Construction began in 2010 and the building was completed 12\31\10.Gutierrez made payments to the construction company of $1,500,000 on 7\1, $3,300,000 on 9\1, and $3,000,000 on 12\31.Average accumulated expenditures were

Question

Quizplus · Accepted Answer

The average accumulated expenditures formula is calculated by taking the sum of all payments made to date, divided by the number of payments made, and then multiplied by the number of months in the year.

In this case, there were 3 payments made: $1,500,000 on 7/1, $3,300,000 on 9/1, and $3,000,000 on 12/31. The sum of these payments is $7,800,000.

There were a total of 6 months in which payments were made (July, August, September, October, November, and December), so the formula becomes:

($7,800,000 / 3) x 6 = $1,850,000

Therefore, the answer is choice B, $1,850,000.

Gutierrez Company Is Constructing a Building