Model: Estimated Profit on Completion of Contract

VRS Ltd is engaged in construction of a Flyover Project in Chennai. From the following information as on 31 March 2010 you are required to calculate:

  1. Profit to be transferred to P&L A/c (i.e., estimated profit to date on the contract)
  2. Estimated profit on completion of the contract
  3. Cost of the WIP at the year end.

Contract price

Rs.40,00,000

Work certified

Rs.20,00,000

Uncertified work

Rs.10,00,000

Surveyor’s estimation of work completed:

Direct labour

50%

Direct materials

80%

Overheads

50%

Materials sent to site

Rs.5,00,000

Labour

Rs.2,80,000

Overhead

Rs.3,20,000

Materials in hand

Rs.1,00,000