Model: Estimated Profit

A fabrication company undertakes long-term contracts which involve the fabrication of pre-stressed concrete blocks and the erection of the same on the construction site:

The following information is supplied regarding the contract which is incomplete on 31 March 2010:

Cost incurred:

Fabrication costs to date:

8,40,000

Direct materials

2,70,000

Direct labour

2,25,000

Overheads

13,35,000

Escalation costs to date

45,000

Total

13,80,000

Contract price

24,57,000

Cash received on account

18,00,000

Technical estimate of work complete to date:

Fabrication:

Direct materials: 80%

Direct labour & overheads = 75%

Erection = 25%

You are required to prepare a statement of

  1. The estimated profit on completion of contract
  2. The estimated profit to date on the contract