Here are some notes on contract costing and contract accounts in detail:
Contract Costing
Contract costing is a method of costing that is used to determine the cost of a specific contract. Contract costing is typically used by businesses that undertake long-term contracts, such as construction projects.
The cost of a contract is determined by adding up the cost of all of the direct materials, direct labor, and overhead that are incurred on the contract. Direct materials are the materials that are used to make the product or service. Direct labor is the labor that is used to make the product or service. Overhead is the cost of all of the other resources that are used to make the product or service, such as rent, utilities, and insurance.
Contract Accounts
A contract account is a special type of account that is used to track the costs and revenues associated with a specific contract. Contract accounts are typically used in conjunction with contract costing.
The contract account typically includes the following information:
- The contract number
- The description of the contract
- The direct materials used on the contract
- The direct labor used on the contract
- The overhead costs incurred on the contract
- The revenue earned on the contract
- The profit or loss on the contract
Conclusion
Contract costing is a method of costing that is used to determine the cost of a specific contract. Contract costing is typically used by businesses that undertake long-term contracts, such as construction projects. Contract costing has a number of features, including contracts, cost accumulation, cost estimation, cost control, and cost reporting.
Contract Accounts
Contract accounts are special types of accounts that are used to track the costs and revenues associated with a specific contract. Contract accounts are typically used in conjunction with contract costing.
The contract account typically includes the following information:
- The contract number
- The description of the contract
- The direct materials used on the contract
- The direct labor used on the contract
- The overhead costs incurred on the contract
- The revenue earned on the contract
- The profit or loss on the contract
Conclusion
Contract costing and contract accounts are two important concepts in cost accounting. Contract costing is a method of costing that is used to determine the cost of a specific contract. Contract accounts are special types of accounts that are used to track the costs and revenues associated with a specific contract.