Cost of Contracts. Pfeffer Contracting Company repaves highways and does excavation work. On January 1, 1999, the Eastern Highway Project was in process with costs as follows:

During 1999, the company incurred costs for various projects as follows:

Contract overhead is costed to the projects at 50 percent of labor cost. Actual overhead cost for 1999 was $2,090,000. Pfeffer Contracting Company uses a Con- tracts in Process instead of a Work in Process account. Projects completed are charged directly to Cost of Contracts Completed. All projects, with the exceptions of the State University Project and the Market Street Project, were completed during the year.

Required:

1. Determine the costs transferred to Cost of Contracts Completed. Use T- accounts to show this transfer.

2. Using T-accounts, close the underapplied or overapplied contract overhead directly to Cost of Contracts Completed.

3. Determine the total cost of the Eastern Highway Project and the cost of each contract in process at the end of the year. (Show detail by project and cost element.)

Transcribed Image Text:

Materials $810,000 Labor.. 420,000 Contract overhead 210,000