What is contract costing in simple words

Contract costing is the tracking of costs associated with a specific contract with a customer. For example, a company bids for a large construction project with a prospective customer, and the two parties agree in a contract for a certain type of reimbursement to the company.

What is meant by contract costing?

(b) Contract costing is a form of specific order costing which applies where work is undertaken to customer's special requirements and each order is of a long duration. Period of Contract. (a) Contract costing is a specialized system of Job costing applies to long-term contracts. as distinct from short-term jobs.

What is costing in simple words?

Costing is any system for assigning costs to an element of a business. Costing is typically used to develop costs for customers, distribution channels, employees, geographic regions, products, product lines, processes, subsidiaries, and entire companies.

What is contract costing and types?

Contract Costing is a special type of job costing, where the unit of cost is a single contract. The contract itself is a cost center and is executed under the customer's specifications. Contract costing is a variant of job costing system applicable, particularly in case of the organization's doing construction work.

What is another name of contract costing?

Contract costing, also known as terminal costing, is a variant of job costing. Contract means a big job in which work is done at site and not in factory premises. The cost of each contract is ascertained.