The City of Gunnison awarded a $5,000,000 road-construction contract to the Fast
ID: 2386253 • Letter: T
Question
The City of Gunnison awarded a $5,000,000 road-construction contract to the Fast Builders Construction Company. Construction was expected to take three years. After one year, Fast Builders had incurred $625,000 of cost and was approximately 20% completed with the road. The company estimated that another $2,500,000 would be expended to complete the contract. The company is confident regarding its estimates. What amount of profit, if any, should Fast Builders recognize for the first year?a. $0
b. $375,000
c. $500,000
d. $625,000
e. $1,000,000
Explanation / Answer
b. $375,000