contract costing problem and solution

[wadah bushra sulieman]

Contract No………………….. (a/c)

Solution of example (2):

Material received on site 792500

Material on site 31/12 273750 ….(1)

Transfer to site 125250

Plant value on 31/12 318750 …. (2)

Issued from stores 32500

Total material received 950250

Cost of work done=Total -{(1)+ (2)}

Returned to suppliers (37500)

1980750

Returned to stores (1250)

Cost of work completed & certified

Transferred from site to other

1738500

Site (12750)

Cost of work completed but not certified

(51500)

242250

Material available 898750

Wages paid on site 475250

accruing wages 31/12 47250

Direct labor cost 522500

*note:

Head office expenses 5% 57375

Material used=898750-273750=625000

Expenses paid on site 285450

Prime cost=material cost + labor cost

prepaid expenses on 31/12 (28325)

=625000+522500=1147500

257125

5%×1147500=57375

Sub contractors 325500

Rent of equipment 95500

Accrued rent on31/12 25750

121250

Small tools 15750

Plant purchased 0n 1/1 375000

Total 2573250

Total 2573250

Cash received from on account 1266000

1612800 75%

X 100%

Value of work completed & certified=1266000×100/75=1688000

Profit= value of work completed &certified – cost of work completed & certified

=1688000-1738500=-50500

Loss=50500

Company make losses amounted as 50500

With my best wishes

Eng.Wadah bushra

mba student