CMA Intermediate · Cost Accounting · Contract Costing
A contract was started during the year. Direct costs incurred are ₹9,00,000. Outstanding wages at year end are ₹40,000 and prepaid site rent is ₹15,000. Work uncertified is valued at cost ₹1,10,000 (included in the direct costs above). What is the total cost of work certified, taking cost to include accruals and prepayments?
Cost of work certified is ₹8,15,000. Add outstanding wages of ₹40,000 and deduct prepaid rent of ₹15,000 to get a total cost of ₹9,25,000, then deduct the uncertified work at cost of ₹1,10,000.
- A₹8,25,000Correct
- B₹8,15,000
- C₹8,50,000
- D₹8,65,000
Explanation
Adjusted cost = 9,00,000 + 40,000 outstanding − 15,000 prepaid = ₹9,25,000. Deduct work uncertified ₹1,10,000 to get ₹8,15,000 for work certified. Check: 9,25,000 − 1,10,000 = 8,15,000.
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