Construction expects to complete its P1,500,000 fixed price contract at a total costof Pl 250 000 excluding P750,000 previously incurred from an originally estimated totalcost of P1,250,000. Using the percentage of completion method, what should be the balance of the Construction in Progress (CIP) account?*   A. P250,000 B. P900,000

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Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.