Contract costing doubt

Everything is clear in the solution. Contract price is 20L and 50 % has been certified so work certified is 10L

Originally posted by : SANDEEP R. WAWHAL
	friends, pls explain how work certified and notional profit is calculated in the attached question. Urgent

Dear SANDEEP,

Work Certified is already given in the question as certified by architect i.e, 50% of contract price of Rs.20 Lakhs

Work Uncertified is calculated on cost basis, As given in the question that 2/3 of contract was completed and 1/2  half was certifed by the architect, means 2/3-1/2 = 1/6 remains uncertified.

Work Cost for 2/3 of contract is 10,49,000, therefore value of uncertified work will be

1049000 X 3/2 X 1/6 = 2,62,250

Notional profit is balancing figure or may be calculated like this

Work Certified- (Work Cost- Work Uncertified)= Notional Profit

10,00,000-(10,49,000-2,62,500) = 2,13,250

Hope this will clear you doubt,

Thanks prabhakar for detailed explainaiton......

Agree with friend Prabhakar............

Mistake sir.....

Contract revenue should be 20lac * 66.67% =1333400

Profit (1333400-1049000)=284400

In contract costing,which price is considered for degree of completion whether the contract price or the contractee accepted price?

As the cost to date is 1049000, and here it given that 2/3 of contract is completed it means, cost of full contract will be 1049000*3/2=1573500. And it's given 50% of contract is completed than it means cost of work certified will be 50% of 1573500 i,.e 786750. So notional profit= work certified - cost of work certified i.e, 1000000-786750=213250 Work uncertified(valued at cost)= cost to date(works cost)- cost of work uncertified i,e. 1049000-786750=262250...

                                                                                   AT CONTRACT PRICE                    AT COST

     CONTRACT COMPLETED UP TO DATE                  13,33,333 (2/3 X 2000000)                 10,49,000

      WORK CERTIFIED UP TO DATE                            10,00,000 (1/2 X 20,00,000)                     ?  (786750)

                                                                                                                                   (1049000 X 1000000)                                                                                                                                                      1333333

     WORK UNCERTIFIED AT COST = 1049000 -- 786750 = 262250

                                                                                   AT CONTRACT PRICE                    AT COST

CONTRACT COMPLETED UP TO DATE         13,33,333 (2/3 X 20,00,000)             10,49,000

WORK CERTIFIED UP TO DATE                       10,00,000 (1/2 X 20,00,000)                       ?   (7,86,750)

                                                                                                                                     (10,00,000 X 10,49,000)/13,33,333

 WORK UNCERTIFIED AT COST = 1049000 -- 786750 = 262250

ADD ALL EXPENSEES IN DR. AND LESS RALIVENT ITEMS THEN GOT 10,49,000

Sir, 

How to find the amount 10,49,000/-