Result Analysis (Cost Based Percentage of Completion)

Planned Revenue 100

Planned Cost 80

Project Duration 4 Months

 In the first period, few services were performed in the project and therefore the actual costs $20 incurred in the
project. No invoice was raised to the customer.

Period 1 Planned Revenue = 100

Actual Revenue =0
Planned Cost = 80 Settle
Actual Cost = 20 COPA

Percentage of Completion = Actual Cost / Planned cost = 20/80 = 0.25

Settle
Calculated Revenue = POC * Planned Revenue = 0.25* 100 = 25 COPA

If Actual Revenue < Calculated revenue

System creates Revenue in excess Billing

Therefore Revenue in excess Billing = Calculated Revenue – Actual Revenue

= 25 – 0 =25
Profit = Cal Revenue – Actual Cost = 25 – 20 = 5

Income Statement
Expenses Revenue

Actual Cost = 20 Actual Revenue =0

Profit =5 Revenue in excess billing = 25
Total = 25 Total = 25
 In the period 2, you send an invoice of $40 to your customer and also your actual costs in the project increased
to $40.

Period 2 Planned Revenue = 100

Actual Revenue = 40
Planned Cost = 80
Actual Cost = 40

Percentage of Completion = Actual Cost / Planned cost = 40/80 = 0.5

Calculated Revenue = POC * Planned Revenue = 0.5* 100 = 50

If Actual Revenue < Calculated revenue

System creates Revenue in excess Billing

Therefore Revenue in excess Billing = Calculated Revenue – Actual Revenue

= 50 –40 =10
Profit = Cal Revenue – Actual Cost = 50 – 40 = 10

Income Statement
Expenses Revenue

Actual Cost = 40 Actual Revenue = 40

Profit = 10 Revenue in excess billing = 10
Total = 50 Total = 50
 In the period 3, you send another invoice of $40 to your customer and actual costs increased to $60.

Period 3 Planned Revenue = 100

Actual Revenue = 80
Planned Cost = 80
Actual Cost = 60

Percentage of Completion = Actual Cost / Planned cost = 60/80 = 0.75

Calculated Revenue = POC * Planned Revenue = 0.75* 100 = 75

If Actual Revenue < Calculated revenue

System creates Revenue Surplus

Therefore Revenue surplus = Actual Revenue - Calculated Revenue

= 80 –75 =5
Profit = Cal Revenue – Actual Cost = 75 – 60 = 15

Income Statement
Expenses Revenue

Actual Cost = 60 Actual Revenue = 80

Profit = 15
Revenue Surplus =5 Total = 80
Total = 80