In contract costing, if the amount of work certified is 1/4 th or more but less than 1/2 of the 'contract price', profit to be transferred to the profit and loss account can be calculated as —

CS Executive · Cost and Management Accounting · PYQS · December 2014
In contract costing, if the amount of work certified is 1/4 th or more but less than 1/2 of the 'contract price', profit to be transferred to the profit and loss account can be calculated as —
(A) 1/3 x Notional profit x {Cash received / Work certified}
(B) 2/3 x Notional profit x {Cash received / Work certified}
(C) Estimated total profit x {Work certified / Contract price}
(D) 1/2 x Notional profit x {Cash received / Work certified}.

Answer & Explanation:

Correct Answer: Option (A)

Correct answer: (A) 1/3 x Notional profit x {Cash received / Work certified}.

Topics: Contract Costing

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