Question

What is the earned profit of the following project? (Answer with an integer; Round to the nearest integer) Job Name: Smith Remodel Current Contract Amount: $203,000 Total Estimated Cost at Completion: $197,000 Actual Costs to Date: $100,000 Total Billed: $99,000

Answer 1

Solution:

% completion = actual cost till date / Total estimated costs = $100,000 / $197,000 = 50.76142%

Revenue to be recognized using percentage of completion = $203,000 * 50.76142% = $103,046

Earned profit of the project = Revenue Earned - Cost incurred = $103,046 - $100,000 = $3,046