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What are the different methods of calculating profit on an incomplete contract?
There are several methods for calculating profit on an incomplete contract, including the percentage-of-completion method, the completed-contract method, and the cost recovery method. The percentage-of-completion method recognizes revenue and expenses based on the progress of the project, allowing for profit to be recognized as work is completed. The completed-contract method defers all profit recognition until the contract is fully completed, while the cost recovery method only recognizes profit once costs have been fully recovered. Each method has implications for financial reporting and tax treatment, depending on the nature of the contract and business practices.
What are the uses of marginal costing and absorption costing?
to calculate the profit easilly
Explain how the profit on incomplete concecpt is determined?
The profit on an incomplete contract is determined by assessing the proportion of work completed relative to the total contract value. This is often quantified using the percentage-of-completion method, which calculates revenue based on the costs incurred to date compared to the estimated total costs of the project. Any recognized revenue is then adjusted for the costs incurred, reflecting the profit earned on the completed portion of the contract. This approach ensures that profits are matched with the work accomplished during the reporting period.
What are the limitations of absorption costing?
Absorption costing does not understand the importance of fixed costs. In absortption costing, fixed costs are absorbed to unit, therefore it is hard to distinguish between variable and fixed costs. And also, the variability of profit will cause confusion, the reason is that the net profit varies with both sales and stock changed under absorption costing. Absorption costing does not understand the importance of fixed costs. In absortption costing, fixed costs are absorbed to unit, therefore it is hard to distinguish between variable and fixed costs. And also, the variability of profit will cause confusion, the reason is that the net profit varies with both sales and stock changed under absorption costing.
How do you calculate restaurant profit?
Restaurant Gross profit = Total generated revenue - total costing *total costing = fixed assets, stock in hand, manpower, utilities, rental and maintenance. *Gross profit=Revenues-Variable costs-fixed costs
What will be the profit percent if a bag of price costing Rs.480 is sold by making a profit of Rs 120?
It is 25%.
Find the selling price of an article costing rs.30that was sold at a profit of 15 percent of the cost price?
find the selling price of an article costing Rs.30.00,that was sold at a profit of 15% of the cost price
What is proFit and attendance in building contract?
ProFit in a building contract typically refers to the profit margin that a contractor expects to earn from a project, often calculated as a percentage of the overall costs. Attendance, on the other hand, refers to the presence and participation of the contractor’s staff or subcontractors on-site to ensure that the work is completed as per scheduled timelines and specifications. Both elements are crucial for managing project costs and ensuring successful project delivery.
Why is net profit always greater in absorption costing than in direct costing?
Net profit is typically higher in absorption costing than in direct costing because absorption costing allocates all manufacturing costs, including fixed overheads, to the cost of goods sold. This means that when inventory is produced but not sold, some fixed costs remain in inventory on the balance sheet rather than being expensed, leading to higher reported profits. In contrast, direct costing only includes variable costs in the cost of goods sold, resulting in a more immediate recognition of fixed overhead expenses, which can lower net profit when inventory levels fluctuate.
Compare marginal costing versus cvp analysis?
CVP stands for Cost-Volume-Profit.
What is the opposite for turnkey contract?
The opposite of a turnkey contract is a cost-plus contract. In a cost-plus arrangement, the contractor is reimbursed for their allowable expenses and paid an additional amount as profit, rather than a fixed price for the entire project. This structure can lead to less predictability in costs and timelines compared to a turnkey contract, where the contractor delivers a completed project for a predetermined price.
Can an Ijara contract be a discounted contract for the purpose of calculating profit?
The Ijara contract cannot be discounting. because on the date of the contract you don't agree the profit amount with the customer. Under actual business scenario, you will link the Ijara to a LIBOR / EIBOR rate feeds.
