Question

the standard that is applicable to contract costing is _____​

Answer 1

Answer:

accounting

Explanation:

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Answer 2

ANSWER :

The standard that is applicable to contract costing is Accounting Standard 7.

• The Accounting Standard 7 relates with the accounting of construction contract. The objective of this Standard is to prescribe the accounting treatment of revenue and costs associated with construction contracts.

MORE INFORMATION :

➲ Contract costing is a special type of job costing in which the unit of cost is a single contract. In other words, Contract costing is a form of specific order costing in which job undertaken is relatively large and it generally takes period longer than a year to complete.

➲ There are mainly two types of Contract Costing :

• (a) Cost Plus Contract : Under this contract, a fixed margin of profit is added to the total cost of the contract to ascertain the value of the contract.

• (b) Fixed-Price Contract : Under this contract, the contractor and the contractee both parties agree to a fixed contract price.

➲ For the purposes of Accounting Standard 7, Construction contracts include:

• (a) The contracts for the rendering of services that are directly related to the construction of the asset.

• (b) The contracts for restoration or destruction of assets, as well as the restoration of the environment following the demolition of assets.

➲ The Contract costs should comprise the following :

• (a) Costs which relate directly to the specific contract.

• (b) Costs which are attributable to contract activity in general and also can be allocated to the contract.

• (c) Some other costs as are specifically chargeable to the customer under the terms of the contract.