What is contract costing ? Where it is considered appropriate
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Contract costing is the tracking of costs associated with a specific contract with a customer.
Explanation:
Contract costing:
One contract serves as the unit of cost in the unique work costing method known as contract costing. The contract itself is a cost center that is carried out in accordance with the customer's requirements. When an organization performs building work, a variation of the job costing approach called contract costing may be used. Terminal pricing is another name for it. Every contract, whether it is short- or long-term, is handled like a job.
Contract costing is mainly applied in building construction, civil engineering projects, shipbuilding, road, and railway line contracts, construction of bridges, etc
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