Contract costing HR Construction plc makes up its accounts to 31 March each year. The following details have been extracted in relation to two of its contracts:

Depreciation is charged on plant using the straight line method at the rate of 12 per cent per annum.
Required:

(a) Prepare contract accounts, in columnar format, for EACH of the contracts A and B, showing clearly the amounts to be transferred to profit and loss in respect of each contract.
(20 marks)

(b) Show balance sheet extracts in respect of EACH contract for fixed assets, debtors and work in progress.
(4 marks)

(c) Distinguish between job, batch and contract costing. Explain clearly the reasons why these methods are different.
(6 marks)
(Total 30 marks)
CIMA Stage 2

Transcribed Image Text:

Commencement date Target completion date Retention % Contract A 1 April 2017 31 May 2018 4 Contract B 1 December 2017 30 June 2018 3 (000) (000) Contract price 2000 550 Materials sent to site 700 150 Materials returned to stores 80 30 Plant sent to site 1000 150 Materials transferred (40) 40 Materials on site at end of period 75 15 Plant hire charges 200 30 Labour cost incurred 300 270 Central overhead cost 75 18 Direct expenses incurred" 25 4 Value certified 1500 500 Cost of work not certified 160 20 Cash received from client 1440 460 Estimated cost of completion 135 110