Business FinancesQuestion 339 of 690
A contractor's job came in with actual costs of $88,000 against an estimate of $80,000, while the contract price stayed at $95,000. The MOST useful lesson from this job cost comparison is that:
a.The contractor should stop tracking job costs
b.The estimate should have been lower
c.The contract price was set too high
d.The estimate underestimated costs, so future bids should be reviewed for accuracy
Explanation
Comparing actual costs to the estimate revealed an $8,000 cost overrun. Reviewing why the estimate fell short helps the contractor bid more accurately on future jobs and protect profit.
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