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Contract costing doubt

C.A. Sandeep Wawhal (CA, PGDFM, BCom) (1831 Points)

02 December 2011

friends,

pls explain how work certified and notional profit is calculated in the attached question.

Urgent

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16 Replies

ashish gupta ( student) (1922 Points)
Replied 02 December 2011

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

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CA PRABHAKAR JHA (ACA) (313 Points)
Replied 02 December 2011

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,

C.A. Sandeep Wawhal (CA, PGDFM, BCom) (1831 Points)
Replied 02 December 2011

Thanks prabhakar for detailed explainaiton......

1 Like

madinashabana11 (MBA) (1112 Points)
Replied 02 December 2011

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

prajith (Student) (24 Points)
Replied 21 October 2012

Mistake sir.....

Contract revenue should be 20lac * 66.67% =1333400

Profit (1333400-1049000)=284400

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snata mohapatra (cs) (21 Points)
Replied 11 December 2013

How to calculate this work cost of 2/3 work completed????plzzz explain me sir....it's urgent

yamini mallireddy (student) (23 Points)
Replied 10 August 2014

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

SC Charuhas (student) (35 Points)
Replied 06 September 2016

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...

CA Ajay Thakkar (Others) (148 Points)
Replied 19 September 2016

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

CA Ajay Thakkar (Others) (148 Points)
Replied 19 September 2016

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

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Pooja (Student) (22 Points)
Replied 12 December 2016

In the above answer; How do we get 10,49,000 ? Please help

Shaurya Agarwal (MEERUT) (22 Points)
Replied 08 July 2017

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

Vishal Pandit (3 Points)
Replied 07 March 2018

the contract price rs 600000 and the amount certified by the architect,after deduction of 20% retention money,was rs 241600 the work being certified on 30 june 2016 what is the amount of work certified?