Chapter-7

Contract Costing, BBA

1.(N.U.-BBA-2006, 2017,2020)
A construction company obtained a contract and commenced work on 1st May 2007. On
31st December 2007 the following information was obtained in respect of the contract:

Materials purchased for the contract. 3,11,000

Materials issued from store. 1,04,960
Wages paid. 1,15,300
Direct expense 9,400
Indirect exp. 38,200
Plant purchased. 86,000
Installation cost of plant 2,000
Wages accrued. 6,500
Architects’ fees 2,500
th
The certified value of work done up to 30 November was tk. 5,50,000. Materials at site
on 31st December were valued at tk. 14,500. Materials costing tk. 9,000 were damaged
and were sold at a nominal value of tk. 1,200. The plant was revalued at tk. 65,000 on 31 st
December.
Complete the contract account and ascertain profit to be credited to profit and loss
account.

2.(N.U.BBA-2008)
Builders Ltd. signed a contract for tk. 1,50,000 from 1st January 2007. The following
information is obtained in respect of the contract for year ended 31 st December 2007:

Materials issued 27,000

Wages 41,250
General exp. 1,500
Plant installed. 7,500
Materials at site 1,500
Wages accrued 1,275
General exp. accrued 255
Work certified 75,000
Cash required on work certified 56,250
Works completed but not certified 2,250
The plant was installed on the commencing date of the contract and the depreciation is
calculated at 10% per annum. Complete the contract account and show how much profits
should be credited to the profit and loss account for the year.

3. (N.U.-BBA 2009)
On 1st March, 2008 Road construction Ltd. started contract no. 1216- a duel carriageway
bypass road for a contract price of tk. 9,50,000 with completion schedule for 31 st
December 2009. The budgeted cost of the contract was tk. 8,75,000. Road construction
Ltd. has a financial year end at 31st December. On 31st December, 2008 the figures in the
company’s books were :

Materials issued to site from store 98,000

Materials bought direct at site 1,09,000
Materials returned to store from site 14,000
Wages paid at site 1,49,000
Plant at cost 1.3.08 70,000
Hire of plant 1.3.08 to 31.12.08 76,000
Supervisory salaries 27,000
Share of head office costs 42,000
Paid to sub contractors 18,000
Wages due on 31.12.08 4,000
Due to sub contractors 5,000
Value of work certified 31.12.08 6,50,000
Cost of work completed but not yet certified 35,000
Cash received relating to work certified (balance retention money) 5,85,000
Value of materials on site 31.12.08 18,000
Depreciation on plant should be provided at 20% per annum on cost.
Required: To show the contract account in full with the amount you would recommend to
be taken to the company’s profit and loss account for the year to 31.12.08 and the work in
progress figure.

4.(N.U.BBA-2012)
Builders Ltd. was awarded a contract to build an office block in Dhaka and works
commenced at the site on 1st May, 2012:
During the period to 28th February, 2013 the expenditure on the contract was as follows:

Materials issued from stores. 94,110

Materials purchased. 2,80,700
 Direct expenses 61,490
Wages 1,84,930
Charge made by the company for administration exp. 21,460
st
Plant and machinery purchased on 1 May, 2012 for use at site tk. 1,21,800.
On 28th February, 2013, the stock of materials at the site amounted to tk. 21,460 and there
were amounts outstanding for wages tk. 3,660 and direct expenses tk. 490. Builders Ltd.
has received on account the sum of tk. 6,41,700 which represents the amount of
certificate number 1 issued by architects in respect of work completed to 28 th February,
2013, after deducting 10% retention money.
The following relevant information is also available.
(a) The plant and machinery has an effective life of 5 years with no residual value.
(b)The company only takes credit for two-thirds of the profit on work certified as
reduced proportionately on realized basis.
You are required:
(i) To prepare a contract account for the period to 28 Th February, 2013, and
(ii) To show your calculation of the profit to be taken to the credit of the company’s
profit And loss account in respect of the work covered by certificate number 1.

5. (N.U.BBA- 2014)
The following particulars were obtained in respect of a contract for the period ending on
December 31, 2014 :

Materials purchased 1,62,400

Materials issued from stores 72,000
Materials supplied by the contractee 42,300
Wages 1,54,700
Direct expense 27,500
Sub contract 30,000
Plant which has been used in other contract 25,000
Addition plant purchased 8,000
Other expenses 12,600
st
The contract which has been started on 1 January, 2014 was for tk. 6,00,000. The
amount received tk. 4,00,000 being 80% of the work certified. Materials worth tk. 4,000
were sold at site for tk. 3,500. Materials at site at the closing date were valued at tk.
17,000 up to December, 2014. The contract account was debited with tk. 6,300 as
depreciation.
Prepare the contract account which the amount of profit to be transferred to profit and
loss account.

6. (N.U.-2015)
A building contractor undertook to construct a building for which the following details
are supplied:

Materials purchased 1,42,800

Materials issued from stores 72,000
Materials returned from sites to stores 5,000
Materials supplied by the contractee 52,500
Wages 1,34,700
Direct expense 25,300
Sub contract 32,000
Plant which has been used in other contract 28,000
Addition plant purchased 18,000
Other expenses 10,600
st
The contract which has been started on 1 January, 2009 was for tk. 6,50,000. The
amount received tk. 4,12,000 being 80% of the work certified. Cost of work uncertified is
tk. 13,000. Materials worth tk. 3,000 were sold at site for tk. 2,500. Materials at site at the
closing date were valued at tk. 16,000 up to December, 2009. The contract account was
debited with tk. 5,200 as depreciation.
Prepare the contract account which the amount of profit to be transferred to profit and
loss account.