Following are the distinctive features of contract costing:
1. A separate contract account is maintained for each contract.
2. Each contract is considered as a cost unit.
3. A major portion of contract work is done at the contract site.
4. Expenses incurred at the contract site are considered to be direct expenses.
5. Establishment expenses like head office, central store department are treated as overhead expenses. These overheads are recovered either based on the material consumption ratio, labor cost ratio, labor hour ratio or the value of material or labor consumption ratio.
6. Number of contract works with a contractor may not be very large.
1. A separate contract account is maintained for each contract.
2. Each contract is considered as a cost unit.
3. A major portion of contract work is done at the contract site.
4. Expenses incurred at the contract site are considered to be direct expenses.
5. Establishment expenses like head office, central store department are treated as overhead expenses. These overheads are recovered either based on the material consumption ratio, labor cost ratio, labor hour ratio or the value of material or labor consumption ratio.
6. Number of contract works with a contractor may not be very large.
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