ADVANCED CONTRACTING EXAM
QUESTIONS AND ANSWERS
The-owner-requests-changes-which-will-cost-the-contractor-$2,500-in-labor-and-materials-
and-$700-in-overhead-costs.-With-the-change,-the-contractor-would-be-relieved-of-$1,000-
in-labor-costs-and-$280-in-overhead-costs-from-the-original-contract.-The-original-bid-
included-profit-of-10%-of-all-costs.-The-contractor-wants-to-make-a-profit-of-10%-of-all-
costs-on-the-changes.-The-amount-of-the-change-order-should-include-a-request-of-an-
additional...---ans-✔✔$2,112
A-lump-sum-contract-on-a-project-has-a-total-contract-price-of-$200,000.-Retainage-has-
been-held-back-at-10%.-The-contractor-has-received-progress-payments-of-90%-of-the-
project.-The-contractor-submits-a-request-for-the-final-payment-for-the-now-completed-
project.-The-final-payment-amount-should-be-for...---ans-✔✔between-$35,000-and-
$40,000
A-contractor-agrees-to-unit-price-contract-to-Product-A-for-$50-per-unit,-Product-B-for-$50-
per-unit,-and-Product-C-for-$375-per-unit.-The-contractor-is-also-to-add-30%-for-overhead-
and-profit.-How-much-should-the-contractor-be-paid-for-producing-27-units-of-Product-A,-
56-units-of-Product-B-and-78-units-of-Product-C?---ans-✔✔Between-$40,000-and-$45,000
A-contract-calls-for-liquidated-damages-of-$500-per-day.-The-project-completed-five-days-
late-because-it-was-delayed-by-rain.-The-completion-would-have-been-ten-days-earlier-if-it-
were-not-for-the-rain-delay.-There-was-a-$500-bonus-per-day-for-the-contractor-for-early-
completion.-No-extension-of-time-was-requested-or-granted.-How-much-does-the-
contractor-earn-or-owe?---ans-✔✔Owes-$2,500-in-Liquidated-damages
A-job-has-a-bid-price-of-165,000-after-direct-costs-and-overhead-are-factored.-What-will-
the-final-bid-be-if-the-profit-markup-is-11.5%?---ans-✔✔$186,440
Given-the-following-information,-is-it-advantageous-to-purchase-or-rent-this-particular-
piece-of-equipment-if-it-has-3-useful-years?---ans-✔✔Purchasing-saves-$3,160
In-a-cost-plus-contract,-the-contractor-receives-direct-costs-for-labor-and-materials-with-a-
40%-markup,-a-10%-bonus-if-the-total-cost-to-the-owner-is-less-than-$100,000,-and-a-
$500-bonus-for-each-day-that-the-work-is-completed-early.-The-final-cost-of-labor-and-
, materials-is-$60,000-and-the-work-is-done-5-days-early.-How-much-is-the-contractor-
due?---ans-✔✔Between-$90,000-and-$95,000
What-is-the-bid-for-the-following-when-there-is-a-combined-profit-and-overhead-of-30%?
--10-units-at-$75-each
--20-units-at-$200-each
--30-units-at-$290-each---ans-✔✔$19,214
A-firm-has-current-assets-of-$68,000,-fixed-assets-of-$162,000,-current-liabilities-of-
$45,000,-and-long-term-liabilities-of-$72,000.-The-firm's-financial-position-would-be-
considered-to-be...---ans-✔✔Adequate-for-taking-on-a-major-project
The-cost-of-equipment-is-$1,000,-the-cost-of-materials-is-$6,000,-and-direct-labor-is-
$3,000.-Project-overhead-is-20%-of-direct-labor,-general-overhead-is-10%-of-direct-labor-
and-materials,-and-profit-is-10%-of-all-cost.-The-owner-offers-to-pay-$12,000.-If-the-
contractor-accepts-the-offer,-what-would-be-the-contractor's-anticipated-profit-or-loss?---
ans-✔✔Profit-$500
A-firm's-financial-situation-is-as-follows:
--Current-Assets:-$80,000
--Fixed-Assets:-$112,000
--Inventory-including-Assets:-$12,000
--Current-Liabilities:-$30,000
--Long-Term-Liabilities:-$86,000
--Net-Annual-Income:-$57,000
What-is-the-firm's-working-capital?---ans-✔✔$50,000
A-non-exempt-employee-of-a-contractor-covered-by-the-Fair-Labor-Standards-Act-works-
30-hours-during-the-first-week-of-a-two-week-period.-The-employee-works-50-hours-during-
the-second-week-to-make-up-the-missed-time.-The-employee's-pay-rate-is-$12-per-hour.-
What-should-be-the-employee's-gross-pay-for-this-two-week-period?---ans-✔✔Between-
$1,000-and-$1,050
A-contractor-who-uses-the-accrual-basis-of-accounting-performs-and-bills-for-$10,000-
worth-in-June-and-includes-$8,000-worth-of-expenses-in-June.-The-contractor-receives-
$8,000-in-June-for-the-June-work-and-also-receives-$3,000-for-work-done-in-May.-The-
contractor-pays-for-$5,000-of-the-June-expenses-in-June,-and-also-pays-$1,000-of-May-
expenses.-Disregarding-any-other-income-or-costs,-how-much-net-income-will-the-
contractor-recognize-in-June?---ans-✔✔$2,000
For-one-month-a-company-bills-out-$15,000-in-completed-work-and-receives-$5,000-in-
payments.-They-pay-$5,000-to-supply-hours-and-post-another-$5,000-in-bills-to-pay-next-
month.-Using-a-cash-accounting-method-and-not-considering-any-other-revenue-or-
expenses,-what-is-the-company's-net-income-for-the-month?---ans-✔✔$0
QUESTIONS AND ANSWERS
The-owner-requests-changes-which-will-cost-the-contractor-$2,500-in-labor-and-materials-
and-$700-in-overhead-costs.-With-the-change,-the-contractor-would-be-relieved-of-$1,000-
in-labor-costs-and-$280-in-overhead-costs-from-the-original-contract.-The-original-bid-
included-profit-of-10%-of-all-costs.-The-contractor-wants-to-make-a-profit-of-10%-of-all-
costs-on-the-changes.-The-amount-of-the-change-order-should-include-a-request-of-an-
additional...---ans-✔✔$2,112
A-lump-sum-contract-on-a-project-has-a-total-contract-price-of-$200,000.-Retainage-has-
been-held-back-at-10%.-The-contractor-has-received-progress-payments-of-90%-of-the-
project.-The-contractor-submits-a-request-for-the-final-payment-for-the-now-completed-
project.-The-final-payment-amount-should-be-for...---ans-✔✔between-$35,000-and-
$40,000
A-contractor-agrees-to-unit-price-contract-to-Product-A-for-$50-per-unit,-Product-B-for-$50-
per-unit,-and-Product-C-for-$375-per-unit.-The-contractor-is-also-to-add-30%-for-overhead-
and-profit.-How-much-should-the-contractor-be-paid-for-producing-27-units-of-Product-A,-
56-units-of-Product-B-and-78-units-of-Product-C?---ans-✔✔Between-$40,000-and-$45,000
A-contract-calls-for-liquidated-damages-of-$500-per-day.-The-project-completed-five-days-
late-because-it-was-delayed-by-rain.-The-completion-would-have-been-ten-days-earlier-if-it-
were-not-for-the-rain-delay.-There-was-a-$500-bonus-per-day-for-the-contractor-for-early-
completion.-No-extension-of-time-was-requested-or-granted.-How-much-does-the-
contractor-earn-or-owe?---ans-✔✔Owes-$2,500-in-Liquidated-damages
A-job-has-a-bid-price-of-165,000-after-direct-costs-and-overhead-are-factored.-What-will-
the-final-bid-be-if-the-profit-markup-is-11.5%?---ans-✔✔$186,440
Given-the-following-information,-is-it-advantageous-to-purchase-or-rent-this-particular-
piece-of-equipment-if-it-has-3-useful-years?---ans-✔✔Purchasing-saves-$3,160
In-a-cost-plus-contract,-the-contractor-receives-direct-costs-for-labor-and-materials-with-a-
40%-markup,-a-10%-bonus-if-the-total-cost-to-the-owner-is-less-than-$100,000,-and-a-
$500-bonus-for-each-day-that-the-work-is-completed-early.-The-final-cost-of-labor-and-
, materials-is-$60,000-and-the-work-is-done-5-days-early.-How-much-is-the-contractor-
due?---ans-✔✔Between-$90,000-and-$95,000
What-is-the-bid-for-the-following-when-there-is-a-combined-profit-and-overhead-of-30%?
--10-units-at-$75-each
--20-units-at-$200-each
--30-units-at-$290-each---ans-✔✔$19,214
A-firm-has-current-assets-of-$68,000,-fixed-assets-of-$162,000,-current-liabilities-of-
$45,000,-and-long-term-liabilities-of-$72,000.-The-firm's-financial-position-would-be-
considered-to-be...---ans-✔✔Adequate-for-taking-on-a-major-project
The-cost-of-equipment-is-$1,000,-the-cost-of-materials-is-$6,000,-and-direct-labor-is-
$3,000.-Project-overhead-is-20%-of-direct-labor,-general-overhead-is-10%-of-direct-labor-
and-materials,-and-profit-is-10%-of-all-cost.-The-owner-offers-to-pay-$12,000.-If-the-
contractor-accepts-the-offer,-what-would-be-the-contractor's-anticipated-profit-or-loss?---
ans-✔✔Profit-$500
A-firm's-financial-situation-is-as-follows:
--Current-Assets:-$80,000
--Fixed-Assets:-$112,000
--Inventory-including-Assets:-$12,000
--Current-Liabilities:-$30,000
--Long-Term-Liabilities:-$86,000
--Net-Annual-Income:-$57,000
What-is-the-firm's-working-capital?---ans-✔✔$50,000
A-non-exempt-employee-of-a-contractor-covered-by-the-Fair-Labor-Standards-Act-works-
30-hours-during-the-first-week-of-a-two-week-period.-The-employee-works-50-hours-during-
the-second-week-to-make-up-the-missed-time.-The-employee's-pay-rate-is-$12-per-hour.-
What-should-be-the-employee's-gross-pay-for-this-two-week-period?---ans-✔✔Between-
$1,000-and-$1,050
A-contractor-who-uses-the-accrual-basis-of-accounting-performs-and-bills-for-$10,000-
worth-in-June-and-includes-$8,000-worth-of-expenses-in-June.-The-contractor-receives-
$8,000-in-June-for-the-June-work-and-also-receives-$3,000-for-work-done-in-May.-The-
contractor-pays-for-$5,000-of-the-June-expenses-in-June,-and-also-pays-$1,000-of-May-
expenses.-Disregarding-any-other-income-or-costs,-how-much-net-income-will-the-
contractor-recognize-in-June?---ans-✔✔$2,000
For-one-month-a-company-bills-out-$15,000-in-completed-work-and-receives-$5,000-in-
payments.-They-pay-$5,000-to-supply-hours-and-post-another-$5,000-in-bills-to-pay-next-
month.-Using-a-cash-accounting-method-and-not-considering-any-other-revenue-or-
expenses,-what-is-the-company's-net-income-for-the-month?---ans-✔✔$0
