During 2025, Pharoah Company started a construction job with a contract price of $1,620,000. 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 2026 $373,700 $902,000 636,300 198,000 303,000 899,000 273,000 807,000 2027 $1,070,000 -0- 1,620,000 1,412,000

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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.