CMA Intermediate · Cost Accounting · Contract Costing
Under the usual practice in contract costing, work uncertified is valued at:
Work uncertified is valued at cost, with no profit added. Because the contractee's architect has not yet approved the work, any profit on it is not recognised. It appears on the credit side of the contract account along with work certified.
- AContract price proportionate to the work done
- BCost incurred on that work, without adding any profitCorrect
- CCost plus a share of notional profit
- DRealisable value less retention money
Explanation
Work uncertified has not been approved by the contractee, so no profit is recognised on it. It is shown at cost in the contract account and added to work certified on the credit side.
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