Question

A project currently in progress has a cost today of $28,205 the estimated cost to complete he project is $11,210, the contract price for the project is $51,500. Using the percentage of completion method of accounting, what is the Revenue earned?

Answer 1

Revenue earned: $36,853

Step-by-step explanation:

Percentage of completion method seeks to calculate the revenue earned by multiplying the total project revenue to the ratio of cost incurred to total cost estimated cost of the project. This is simplified by below calculation:

Revenue earned = Total project revenue * (Cost incurred / Total estimated project cost)

Total estimated project cost = Cost incurred + Estimated cost to complete the project

Total estimated project cost: 11,210 + 28,205 = 39,415

Revenue earned = 51,500 * (28,205 / 39,415)

Revenue earned = $36,853