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Shruthi (Querist)

07 September 2013 from the follg compute a conservative estimate of profit on a contract by four different methods. The contract is 80% complete.

Total expenditure to date ----- 85000

Estimated further exp to -------- 17000
complete the contract

Contract price ----------------- 153000

work certified ----------------- 100000
work not certified ------------8500

cash received ------------------ 81600.

Thanks in advn

CA Pallav Singhania

CA Pallav Singhania (Expert)

07 September 2013 1.

2/3 X Cash Received/ Work certified X Notional profit..

Notional Profit = {100000+8500} - 85000
= 23500

2/3 X 81600/100000 X 23500

=12784

2.

Estimated Profit = 153000 - {85000+ 17000}
= 51000

EP X Cash Received / Contract Price

= 27200

3.

EP X Work Certified / Contract Price

51000 X 100000 / 153000
= 33333.33

4.

Total Cost ={85000+17000}= 102000

EP X Cost Incurred till date / Total Cost

51000 X 85000/102000
= 42500

5.

2/3 X NP X WC / CP

2/3 X 23500 X 100000/ 153000
= 10239.23

Regards,

Shruthi

Shruthi (Querist)

07 September 2013 Thanks for reply....

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