Problem 2
CONSTRUCTION COMPANY is executing a construction project, which is expected
to take three years. The company has signed a fixed price contract for
P12,000,000. The details of the costs incurred to date 2020 are as follows:
Site labor costs 1,000,000
Costs of construction material 3,000,000
Depreciation of PPE used in construction 500,000
Marketing and selling costs 1,000,000
Total 5,000,000
Total contract costs estimated to complete 5,500,000
Determine the revenue, costs and profits to be recognized overtime in 2020.
REVENUE COSTS
GROSS
PROFIT/(LOSS)
A. 5,400,000 4,500,000 900,000
B. 5,400,000 5,500,000 (100,000)
C. 6,000,000 4,500,000 1,500,000
D. 6,000,000 5,500,000 900,000