Romeo Construction enters into a contract with a customer to build a warehouse for $800,000 on March 30, 2014, with an additional performance bonus of $50,000 if the building is completed by July 31, 2014. The bonus is reduced by $10,000 each week that completion is delayed.
Romeo commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes:

Completed by Probability
July 31, 2014 65%
August 7, 2014 25%
August 14, 2014 5%
August 21, 2014 5%

The transaction price for this transaction is .

$845,000

Explanation:

The computation of transaction price for this transaction is shown below:-

Transaction price = (Performance bonus on July 31, 2014 × Probability percentage on July 31, 2014) + (Performance bonus on July 7, 2014 × Probability percentage on July 7, 2014) + (Performance bonus on July 14, 2014 × Probability percentage on July 14, 2014) + (Performance bonus on July 21, 2014 × Probability percentage on July 21, 2014)

= ($50,000 × 65%) + (($50,000 - $10,000) × 25%) + (($50,000 - $10,000 - $10,000) × 5%) + ((($50,000 - $10,000 - $10,000 - $10,000) × 5%)

= $32,500 + $10,000 + $1,500 + $1,000

= $45,000

Transaction Price = Warehouse + Transaction price

= $800,000 + $45,000

= $845,000

We simply applied the above formula

d, conspicuous consumption is when you try to increase your wealth or social status (and in the case he's trying to create the perception of wealth considering he can't really afford it)

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