You recently terminated a production contract for the convenience of the government. The system was developed for your agency, but the agency head recently determined that additional units were not required because of a reduction in the agency mission. The contractor submitted the following information related to an inventory basis settlement: Negotiated settlement expenses: $10,500 Contract price for complete end items: $75,000 Remainder of settlement amount: $507.600, Contract price: $1,045,500 Incurred costs before contract termination: $600,000. Estimated cost to complete the contract if it had not been terminated: $675,500.

Calculate the settlement amount using the inventory basis for termination:

A. $562,644

B. $704,772

C. $415,440

D. $501,732