Reference no: EM132961707

Question - Duncan Construction Company has won the bid to be the contractor of the Fil-Ai, Inc. Shiopping Complex project in Canlubang. The construction project is expected to be complete within four years. The bid price submitted by Duncan was pegged by adding a 15% profit on the estimated project cost of P10,000,000. The engineers at Duncan estimate that 15% of the project cost will be incurred in the first year; and the remaining cost divided equally between the third and fourth year.

1. How much is the company charging for the entire project?

2. Under the delivery method, what is the annual cost of the project for the fourth year?

3. Under the delivery method, how much revenue must be recognized for the third year?

4. Under the delivery method, how much profit must be recognized for the second year?

5. Using the percentage-of-completion method, how much profit must be recognized for the first year?

6. Using the percentage-of-completion method, how much revenue must be recognized for the fourth year?

7. Using the percentage-of-completion method, how much profit must be recognized for the third year?

8. Suppose that Duncan and Fil-Air agreed to change the payment scheme to straight cost plus a mark-up of 20%, what would be the recognized for the second year?

9. Under the straight cost plus 20% mark-up scheme, what would be the corresponding profit for the second year?