Example of Stage of Completion Cost Basis

Example of Stage of Completion

The stage of completion can be measured in three ways i.e. cost incurred to date as proportion to total estimated cost , certified work as proportion to contract revenues and physical completion. The first and second methods are also known as cost bases and sales bases respectively.

Example of Stage Completion Cost Basis

ABC & Company entered into contract of bridge construction. The bridge is to be completed within five years. At the end of first year the total costs incurred on the project was 1.2 million. The total cost to be incurred is 5 Million. Calculate the stage of completion

Solution

Cost incurred to date	1.2 million
Total expected cost	5 Million
Stage of completion ( 1.2 million/5 million)	24%

Example of Stage Completion Cost Basis

XYZ & Co bid for a project to build a housing scheme, XYZ is required to construct 100 houses of 1800 sq feet each. The cost per sq feet is $ 200. At the end of first year all 100 houses are partly completed and cost incurred to date is 200 million a further cost of $ 300 million is expected to be incurred in next year. Calculate the stage of completion.

Solution

Cost incurred to date	$ 200 million
Further Cost	$ 300 Million
Total cost	$ 500
Stage of completion ( $ 200/$ 500)	40%