Contract
costing is a method where each contract is treated as cost unit & profit
and loss is ascertained separately. Ex.-Road
& Bridge construction
Concepts
relating to contract costing.
(1)Contractor: Person
who undertakes the task of doing the job
(2)Contractee: Person on
whose behalf the task is being done
(3)Work
certified: Part of the total contract price which has been completed and
approved by the architect
(4)Uncertified
work: Part of the task done but not approved by the architect of the
contractee.
(5)Cash
paid: Part of the work certified that is paid by the contractee
(6)Retention
money: Part of the work certified that is held back by the contractee
(7)Contract
price: Value for which a contract is undertaken
(8)Notional
profit: Difference between the value of work certified and uncertified
less the cost of work done to date
-->
Value of work certified+Value of work not yet completed-Cost of work to date.
(9)Estimated
profit: Excess of the contract price over the estimated total cost of the
contract
