Concept of Contract Costing

 Contract costing

It is also an important type of costing.It is done between producer and purchaser.The process in which contractor contract manufactue to build particular type of product or service that fullfill the need,desire ,demand of conractor the costing that is used o know the expenditure of organisation this type of costing is called contract costing.

In other words we can say that conract costing is a particular type of job costing that is used to produce particular type of product and service in a p;articular time.

Application of  contract costing

1-To build road,bridge,mega bridge ,four line, six line..

2-To contract new railway line.

3-To build new railway line.

Feature of contact costing

There are many feature of contract costing these features are as below.

1-it is  special type of job costing.

2--It belongs to construction and concern sector of construction.

3-It belongs to long period that period may be 1 to 10 years.

4-It records transaction by a particular way ,mode ,method,and so on.

5-It also belongs to special unique world class product or service.

Advantages of contract costing

There are many advantages of contract costing.these are given below.

1-It complete all activities,sub activities ,action by a fast way so projects complete within time.

2-It forecast the expenditure of organisation according to job wise ,function wise ,activity wise.

3-It make the function of expenditure effective ,efficient ,economical  and so on.

4-It improves the performance of the organisation.

5-It improve the function,  sub function, activity, sub acivity at proper way at wright time.

Disadvantages of contract costing.

1-It is not applicable for small scale company or small scale organisation.

It arrives conflict between contractor or contractee at many issue.

3-It profit is pre defined the standard of work is not mention.

4-Sometimes it consumes heavy or extra charges because some organisation depend on projects.