Contract costing terminology, Cost Accounting

Assignment Help:

Contract Costing Terminology

Principles of profit income recognition in contracts

The Notional Profit

This is a component of two items as:

a) Profit taken  = Notional profit x 2/3 x cash received/work certified

This formula of calculating the part of national profit taken in the year is employed while substantial costs have been incurred upon the contract although the contract is not near completion. However when the contract is near completion the profit considered is calculated like:

"Profit taken = Estimated profit x cash received/contract price". 

Where Estimated profit = Contract price - Estimated total cost and

Estimated total cost = Costs incurred to date and estimated future costs.

b) Profit not taken = refers to the part of the national profit such is not recognized in the recent period. It is profit carried forward to be acknowledged in the years such follow.

c) Retention Money

It is a portion of the value of work certified such retained via the contractor to protect himself from faulty work which might be evident at the time of progress payments or at the completion of the contract.  This amount is released after satisfactory performance beneath the contract.


Related Discussions:- Contract costing terminology

What profit is earned by each firm, Three oligopolists, A, B and C, produce...

Three oligopolists, A, B and C, produce an identical product, Q. Q is produced under conditions of constant costs, that is, AC = MC = $100. The market demand schedule for Q is:

Determine the cost, Sanderson Company has the following production data for...

Sanderson Company has the following production data for March: no beginning work in process, units started and completed 28,030, and ending work in process 3,890 units that are 100

Profit analysis and cost volume or cvp analysis, Profit Analysis and Cost V...

Profit Analysis and Cost Volume or CVP Analysis CVP Analysis checks the relationship between profit, activity level and the cost. CVP Analysis assists in a broad range of p

Business and the generation of accounting standards, This time of year we a...

This time of year we all here about football. For me it is the bad news of how poorly the Buffalo Bills are performing. Hopefully your favorite team is doing well. One thing we

Manufacturing concern to organization, Manufacturing Concern to Organizatio...

Manufacturing Concern to Organization There are three manufacturing centres as Making, Packing and Finishing.  These are supported through five support departments, namely Mai

Method of bonus payment , from the following particulars calculate the earn...

from the following particulars calculate the earning of worker . rate per hours $0.50 standard time 200 hours time taken 140 hours

Calculate the inventory turnover ratio, The following information is availa...

The following information is available for the automotive division of Ford Motor Company for 2009.  The company uses the LIFO inventory method.

Prepare a complete cash flow statement of a company, Listed below are some ...

Listed below are some balances of XYZ, Inc as of and for the year ended December 31, 2012 and 2013 Year ending 12/31/13   Reven

Calculate the nonvalue-added cost per unit, Question Roseville, Ltd., s...

Question Roseville, Ltd., sells one of its products for $500 each. Sales volume averages 1,000 units per year. Recently, its main competitor priced their competing product at 1

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd