In 2011, Cupid Construction Co. (CCC) began work on a two-year fixed price contr

ID: 2452294 • Letter: I

Question

In 2011, Cupid Construction Co. (CCC) began work on a two-year fixed price contract project. CCC

uses the percentage-of-completion method to account for such projects and provides you with the following

information (dollars in millions):

What are CCC's estimated remaining construction costs on the project at the end of 2011?

Accounts receivable (from construction progress billings) $37.5

Actual construction costs incurred in 2011 $135

Cash collected on project during 2011 $105

Construction in progress, 12/31/11 $207

Estimated percentage of completion during 2011 60%

A. $0

B. $225 million

C. $90 million

D. $135 million

correct option is "C" - $ 90 million

[% of completion = cost incurred till date /total estimated cost of completion

[ .60 = 135 / total estimated cost of completion]

total estimated cost of completion = 135 /.60 = 225

Remaining estimated construction cost = 225 -135 =$ 90

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