Contract costing, Cost Accounting

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Contract Costing

It is a form of exact order costing, which is applied to relatively large cost units that normally get a considerable length of time to complete as an example of construction or building works. Contract jobs are undertaken in accordance along with particular requirements of contractee/Customer.  Contracts may be distinguished from job orders ia the given features:

The money value of a contract is much larger than such of a job order.

  1. A contract consumes considerably larger amounts of resources than a job order.
  2. For a contract, special progress reports are generally made whereas in job costing, reports are made after the completion of the job.
  3. As a contract, indirect costs are relatively smaller in relation to direct costs though the vice versa is time for job order.

To second the progress of contract works, a particular account identified as a contract account is maintained.


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