Florida General Contractor Practice Exam

Using the percentage of completion method, what is the gross profit to date for a project with a contract amount of 130,000, cost to date of 99,970, and cost to complete of 11,760?

1. 18,270

2. 20,000

3. 22,000

4. 24,000

The correct answer is: 18,270

To determine the gross profit to date using the percentage of completion method, it's essential to first calculate the total estimated cost and then the percentage of completion. The total estimated cost of the project can be calculated by adding the cost to date and the cost to complete: \[ \text{Total Estimated Cost} = \text{Cost to Date} + \text{Cost to Complete} = 99,970 + 11,760 = 111,730 \] Next, we can determine the percentage of completion by dividing the cost to date by the total estimated cost: \[ \text{Percentage of Completion} = \frac{\text{Cost to Date}}{\text{Total Estimated Cost}} = \frac{99,970}{111,730} \approx 0.894 \] Now, we can find out the amount of gross profit recognized to date. First, calculate the total gross profit for the project by subtracting the total estimated cost from the contract amount: \[ \text{Total Gross Profit} = \text{Contract Amount} - \text{Total Estimated Cost} = 130,000 - 111,730 = 18,270 \] Now to calculate the gross profit to date