Question

Which of the following statements is NOT true about contract costing?
a. Number of contracts undertaken at a time is limited
b. Work is done at the site of the customer
C. Requires long period for completion
d. Indirect costs are higher as compared to job costing​

Answer 1

Answer:

In case of automobile industries, either batch costing or job costing is used.

The contract costing method is used mostly by builders, civil contractors, ship builders, and construction and mechanical engineering firms. Generally, the contract is undertaken at the site of contract i.e. customer and according to the specifications of customer.

Answer 2

Answer:

The statement not true about contract costing is  Indirect costs are higher as compared to job costing​.

Explanation:

• Contract costing is the tracking of costs associated with a specific contract with a customer.
• It is the monitoring of costs linked with a selected contract with a client
• An ideal system accomplishes the aims by undertaking certain contracts and completing them.
• Ideally the value of this method is reduced with lower indirect costs as compared to others.
• This must lead to a rise in benefit as compared to deployment costs.

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