Task 2 Scenario Mega construction Plc, are contractors for replacement of a high technology factory for a multinational company. The total value of the contract is 3,500,000 over a three year period. The contract commenced on 1st March 2011, & the following details are available as at 28th February 2012

Material purchases		65,000
Material transfers in from other site		28,000
Material transfer out to another site.		5,000
Material on site, not yet used		28,000
Direct labour		29,000
Direct labour accrued		3,500
Indirect labour		5,000
Indirect labour accrued		1,800
Plant delivered to site		60,000
Hire of equipments		27,000
Hire charges owing		8,400
Head office charges		58,000
Cost of work yet not certified		27,000

Mega Construction Plc, have received payment of 540,000 which represent work certified as completed by architects as at 28 February 2011, less a 15% retention.

The company takes credits for three fourth of the profits on work certified (less retention). The plant is estimated to last the life of the contract, & no residual value is expected.

2.1 Explain the principle of contract costing in construction industry. (20 marks) 2.2 Calculate the attributable profit/ loss & value of work certified. (40 marks) 2.3 Prepare contract cost statement for Mega Construction Plc. (40 marks