contract costing system

CONTRACT COSTING PRESENTATION To Teach Concepts of Contract

Costing

To Identify the Costs in a Contract

To Tell the Importance of Contract Costing

To Calculate Profit on Incomplete Contracts

WHAT IS CONTRACT COSTING

Contract costing is that method of costing in cost accounting which is used to collect and identify all the expenses relating to a specific contract. For this purpose, Contractor has to maintain contract ledger in which he has to show contract account.

CONTRACT COSTS

Material Cost Labor Cost Direct Expenses Overheads Sub-Contract Cost Extra Work Cost

WORK CERTIFIED

Value which is receivable on finishing a contract or part of contract after certifying it with authority or architect’s certificate.

It will be credited to Contract Account

WORK UNCERTIFIED

It will also credited to Contract Account. Completed but not certified

MATERIAL AT SITE

It will be the material which is rest after using in construction at the end of year. It is just like closing stock and will be credited in contract account.

NOTIONAL PROFIT

Credit Side of Contract Account – Debit Side of Contract Account

First Year

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