Current Attempt in Progress Michael Heun, president of Concrete Always, agrees to construct a concrete cart path at Dakota Golf Club. Concrete Always enters into a contract with Dakota to construct the path for $172.000. In addition, as part of the contract, a performance bonus of $34,400 will be paid based on the timing of completion. The performance bonus will be paid fully if completed by the agreed-upon date. The performance bonus decreases by $8,600 per week for every week beyond the agreed-upon completion date. Michael has been involved in a number of contracts that had performance bonuses as part of the agreement in the past. As a result, he is fairly confident that he will receive a good portion of the performance bonus. Michael estimates, given the constraints of his schedule related to other jobs, that there is 55% probability that he will complete the project on time, a 30% probability that he will be 1 week late, and a 15% probability that he will be 2 weeks late. (a) Determine the transaction price that Concrete Always should compute for this agreement. Transaction price $ 51 U 180 00 Sh
Current Attempt in Progress Michael Heun, president of Concrete Always, agrees to construct a concrete cart path at Dakota Golf Club. Concrete Always enters into a contract with Dakota to construct the path for $172.000. In addition, as part of the contract, a performance bonus of $34,400 will be paid based on the timing of completion. The performance bonus will be paid fully if completed by the agreed-upon date. The performance bonus decreases by $8,600 per week for every week beyond the agreed-upon completion date. Michael has been involved in a number of contracts that had performance bonuses as part of the agreement in the past. As a result, he is fairly confident that he will receive a good portion of the performance bonus. Michael estimates, given the constraints of his schedule related to other jobs, that there is 55% probability that he will complete the project on time, a 30% probability that he will be 1 week late, and a 15% probability that he will be 2 weeks late. (a) Determine the transaction price that Concrete Always should compute for this agreement. Transaction price $ 51 U 180 00 Sh
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Michael Heun, president of Concrete Always, agrees to construct a concrete cart path at Dakota Golf Club. Concrete Always
enters into a contract with Dakota to construct the path for $172.000. In addition, as part of the contract, a performance
bonus of $34,400 will be paid based on the timing of completion. The performance bonus will be paid fully if completed by the
agreed-upon date. The performance bonus decreases by $8,600 per week for every week beyond the agreed-upon
completion date. Michael has been involved in a number of contracts that had performance bonuses as part of the agreement
in the past. As a result, he is fairly confident that he will receive a good portion of the performance bonus. Michael estimates,
given the constraints of his schedule related to other jobs, that there is 55% probability that he will complete the project on
time, a 30% probability that he will be 1 week late, and a 15% probability that he will be 2 weeks late.
(a)
Determine the transaction price that Concrete Always should compute for this agreement.
Transaction price
$
ת
51
Sh
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