Assignment Questions - JOB, BATCH & CONTRACT COSTING

Assignment Questions

 

JOB, BATCH & CONTRACT COSTING

 

Question 1. A contract is estimated to be 80% complete in its first year of construction as certified. The contractee pays 75% of value of work certified, as and when certified and makes the final payment on the completion of contract. Following information is available for the first year:

	Rs.
Cost of work-in-progress uncertified	8,000
Profit transferred to Profit & Loss A/c at the end of year I on  incomplete contract	60,000
Cost of work to date	88,000

Calculate the value of work- in-progress certified and amount of contract price.

 

Question 2. Compute a conservative estimate of profit on a contract (which has been 90% complete) from the following particulars. Calculate the proportion of profit to be taken to Profit & Loss Account under various methods and give your recommendation.

                                                                                                                                                                                       Rs.

Total expenditure to date                                                                                                                                   4,50,000

Estimated further expenditure to complete the contract (including contingencies)                                    25,000

Contract price                                                                                                                                                      6,12,000

Work certified                                                                                                                                                      5,50,800

Work uncertified                                                                                                                                                    34,000

Cash received                                                                                                                                                      4,40,640

 

Question 3. A contract expected to be completed in year 4, exhibits the following information:

End of Year                                               Value of work       Cost of work to        Cost of work not         Cash received

                                                                             Certified                          date                 yet certified

                                                                                    (Rs.)                          (Rs.)                              (Rs.)                          (Rs.)

1.                                                                                       0                       50,000                           50,000                               0

2.                                                                           3,00,000                    2,30,000                           10,000                    2,75,000

3.                                                                           8,00,000                    6,60,000                           20,000                    7,50,000

                                                                                           

The contract price is Rs. 10,00,000 and the estimated profit is 20%.

You are required to calculate, how much profit should have been credited to the Profit and Loss A/c by the end of years 1, 2 and 3.

 

Question 4. A Television company manufactures several components in batches. The following data relates to one component;

Annual demand 32,000 units

Set-up cost per batch Rs.120

Annual rate of interest 12%

Cost of production per unit Rs.16

Find Economic Batch Quantity (EBQ)

 

 

ANSWER HINTS
Question No.	Answer
1	Value of work certified Rs.2,00,000; Contract Price Rs.250,000
2	Rs. 98,640
3	Years 1 = Rs. NIL, Year 2= Rs. 24,444;  and Year 3 = Rs. 1,00,000.
4	2000 units