Question

Jeff Heun, president of Splish Always, agrees to construct a concrete cart path at Dakota Golf...

Jeff Heun, president of Splish Always, agrees to construct a concrete cart path at Dakota Golf Club. Splish Always enters into a contract with Dakota to construct the path for $238,000. In addition, as part of the contract, a performance bonus of $34,000 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 $8,500 per week for every week beyond the agreed-upon completion date. Jeff 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. Jeff estimates, given the constraints of his schedule related to other jobs, that there is 50% probability that he will complete the project on time, a 25% probability that he will be 1 week late, and a 25% probability that he will be 2 weeks late.

Determine the transaction price that Splish Always should compute for this agreement.

Transaction Price $enter the transaction price that Splish Always should compute for this agreemen

eTextbook and Media

  

  

Assume that Jeff Heun has reviewed his work schedule and decided that it makes sense to complete this project on time. Assuming that he now believes that the probability for completing the project on time is 92% and otherwise it will be finished 1 week late, determine the transaction price.

Transaction price $enter the transaction price in dollars

eTextbook and Media

show work and explain

Homework Answers

Answer #1
Solution a:
Consideration Bonus Amount Probability of Outcome Revenue Recognized
Bonus if completed on agreed upon date $34,000.00 50% $17,000.00
Bonus if completed one week late $25,500.00 25% $6,375.00
Bonus if completed two weeks late $17,000.00 25% $4,250.00
Variable consideration $27,625.00
Fixed consideration $2,38,000.00
Total transaction price $2,65,625.00
Solution b:
Consideration Bonus Amount Probability of Outcome Revenue Recognized
Bonus if completed on agreed upon date $34,000.00 92% $31,280.00
Bonus if completed one week late $25,500.00 8% $2,040.00
Variable consideration $33,320.00
Fixed consideration $2,38,000.00
Total transaction price $2,71,320.00
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Jeff Heun, president of Windsor Always, agrees to construct a concrete cart path at Dakota Golf...
Jeff Heun, president of Windsor Always, agrees to construct a concrete cart path at Dakota Golf Club. Windsor Always enters into a contract with Dakota to construct the path for $232,000. In addition, as part of the contract, a performance bonus of $41,600 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 $10,400 per week for every week beyond the agreed-upon completion...
Jeff Heun, president of Cullumber Always, agrees to construct a concrete cart path at Dakota Golf...
Jeff Heun, president of Cullumber Always, agrees to construct a concrete cart path at Dakota Golf Club. Cullumber Always enters into a contract with Dakota to construct the path for $214,000. In addition, as part of the contract, a performance bonus of $38,400 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 $9,600 per week for every week beyond the agreed-upon completion...
Peabody Construction Company enters into a contract with a customer to build a warehouse for $950,000...
Peabody Construction Company enters into a contract with a customer to build a warehouse for $950,000 on March 30, 2018 with a performance bonus of $50,000 that will be paid based on the timing of completion (July 31, 2018). The amount of the performance bonus decreases by 10% per week for every week beyond the agreed-upon completion date. The contract requirements are similar to contracts that Peabody has performed previously, and management believes that such experience is predictive for this...
ESTIMATING VARIABLE CONSIDERATION AJD BUILDERS CONSTRUCTION COMPANY ENTERS INTO A CONTRACT WITH A CUSTOMER TO BUILD...
ESTIMATING VARIABLE CONSIDERATION AJD BUILDERS CONSTRUCTION COMPANY ENTERS INTO A CONTRACT WITH A CUSTOMER TO BUILD A 50 KILOMETERS ROAD TO P100,000,000 WITH A PERFORMANCE BONUS OF P60,000,000 THAT WILL BE PAID BASED ON THE TIMING OF COMPLETION. THE AMOUNT OF THE PERFORMANCE BONUS DECREASES BY 10% PER WEEK FOR EVERY WEEK BEYOND THE AGREED-UPON COMPLETION DATE. THE CONTRACT REQUIREMENTS ARE SIMILAR TO CONTRACTS THAT AJD BUILDERS HAS PERFORMED PREVIOUSLY, AND MANAGEMENT BELIEVES THAT SUCH EXPERIENCE IS PREDICTIVE FOR THIS...
CASE STUDY Background Sarah’s project had now become more complex than she had anticipated. Sarah’s company...
CASE STUDY Background Sarah’s project had now become more complex than she had anticipated. Sarah’s company had a philosophy that the project manager would be assigned during proposal preparation, assist in the preparation of the proposal, and take on the role of the project manager after contract award, assuming the company would be awarded the contract. Usually, contract go-ahead would take place within a week or two after contract award. That made project staffing relatively easy for most of the...
Background Sarah’s project had now become more complex than she had anticipated. Sarah’s company had a...
Background Sarah’s project had now become more complex than she had anticipated. Sarah’s company had a philosophy that the project manager would be assigned during proposal preparation, assist in the preparation of the proposal, and take on the role of the project manager after contract award, assuming the company would be awarded the contract. Usually, contract go-ahead would take place within a week or two after contract award. That made project staffing relatively easy for most of the project managers....
Background Sarah’s project had now become more complex than she had anticipated. Sarah’s company had a...
Background Sarah’s project had now become more complex than she had anticipated. Sarah’s company had a philosophy that the project manager would be assigned during proposal preparation, assist in the preparation of the proposal, and take on the role of the project manager after contract award, assuming the company would be awarded the contract. Usually, contract go-ahead would take place within a week or two after contract award. That made project staffing relatively easy for most of the project managers....
The project has been performing as planned, and the team members have been exhibiting increasing levels...
The project has been performing as planned, and the team members have been exhibiting increasing levels of trust between each other. The sponsor and the buyer have been satisfied with the delivery of business value, and user acceptance testing results are positive. A technical expert consulting with the team has expressed concerns that the team is not in agreement on the best way to deliver to the next review. If the project manager wants to support the team in reaching...
Which of the following best describes a project management plan? The project charter, WBS, and project...
Which of the following best describes a project management plan? The project charter, WBS, and project scope statement The schedule, management plans, and budget A formal, approved document used to control the project The project manager's plan for managing and controlling the work The engineering department wants the project objective to be a 10 percent improvement in throughput. The information technology department wants no more than 5 percent of its resources to be used on the project. Management, who is...
QUESTION 1 1. Brianna is trying to increase her chances of being promoted to vice president...
QUESTION 1 1. Brianna is trying to increase her chances of being promoted to vice president by working to build good work relationships with other managers outside her own department. Brianna's behavior should be viewed as dysfunctional politics. functional politics. coercive power. functional influence. 2 points QUESTION 2 1. The Gingerbread Factory has a separate unit that makes their chocolate crunch cookies and another unit that is completely responsible for all operations in producing their ginger snap cookies. The Gingerbread...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT