What is Contract Costing
Contract costing is basically a type of job costing and normally apply to a long term assignment.
Characteristic of Contract Costing
1. Formal Agreement
The contract involve long duration and high cost therefore a formal contract is made between contractor and contractee.
2. Job costing Methodology
Contract costing apply the job costing methodology and cost are collected at a single point which is known as contract account.
3. Direct Cost
Majority of cost in contract costing are direct cost and most of the cost are incurred in direct relation of the contract due to the nature of the job.
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