After studying this chapter you should be able to:
Know the meaning of contract costing.
Understand the features of contract costing.
Understand the contract-costing procedure.
Explain the types of contracts.
Ascertain the profits on incomplete contracts.
Understand the terms: certification of work, retention money, cost-plus contract, paid costing, cost esclation and final claim.
Compute cost and profit of contracts.
Explain the meaning of important key terms.
We have discussed in the previous chapter the specific-order costing, that is, job costing and batch costing. In this chapter, we are going to discuss “contract costing”, which is also a special form of job costing.