During 2025, Nilsen Company started a construction job with a contract price of $1,600,000. The job was completed in 2027. The following information is available. Costs incurred to date Estimated costs to complete Billings to date Collections to date 2025 $400,000 600,000 300,000 270,000 2026 $825,000 275,000 900,000 810,000 2027 $1.070,000 -0- 1,600,000 1,425.000

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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.