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In 2024, Cupid Construction Company (CCC) began work on a two-year fixed price contract project. CCC recognizes revenue over time according to percentage of completion for this contract, and provides the following Information (dollars in millions): Accounts receivable, 12/31/2024 (from construction progress billings) Actual construction costs incurred in 2024 $39.1 $153 $ 121 Cash collected on project during 2024 Construction in progress, 12/31/2024 Estimated percentage of completion during 2024 What is the fixed contract price for CCC's project? Multiple Choice

O $255 million
O $375 million
O $120 million
O $385.1 million
O $ 225 60%

User Rbernabe
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1 Answer

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Final answer:

The correct calculation of the fixed contract price for CCC's project would be $121 million (incurred costs) divided by 60% (completion percentage), resulting in approximately $201.67 million, but this is not an available option, suggesting there might be an error in the question or choices provided.

Step-by-step explanation:

The student is asking how to calculate the fixed contract price for the Cupid Construction Company's project based on the percentage of completion method. Since we know that the estimated percentage of completion during 2024 is 60%, and the actual construction costs incurred in 2024 total $121 million, we can infer that these costs represent 60% of the total expected costs.

Therefore, to find the total expected costs (which would be the same as the fixed contract price because it's a fixed price contract), we divide the incurred costs by the completion percentage: $121 million / 0.60 = $201.67 million (rounded to the nearest hundred thousand, as the options are in millions).

However, this calculated value doesn't match any of the provided choices, hinting there may be an error in the question or in the choices provided. Given the selection of options in the question and assuming there's been a miscalculation or typographical error, none of the given choices are correct based on the provided calculation.

User Alii
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