TechKnowledge Content
Question: How is Revenue Recognition and Billing calculated for Fixed Price and Cost Plus projects?Answer:
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Forecast |
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Actual |
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unit cost |
Qty |
total cost |
baseline rev |
baseline actual |
unit cost |
Overhead |
Qty |
total cost |
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Project 1 |
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Cost Cat 1 |
100 |
10 |
1000 |
100 |
2000 |
43.27 |
30 |
1 |
73.27 |
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Cost Cat 2 |
100 |
10 |
1000 |
100 |
2000 |
43.27 |
30 |
1 |
73.27 |
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Project 2 |
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Cost Cat 1 |
100 |
10 |
1000 |
100 |
2000 |
43.27 |
30 |
1 |
73.27 |
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Cost Cat 2 |
100 |
10 |
1000 |
100 |
2000 |
43.27 |
30 |
1 |
73.27 |
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For an uncombined Cost to Cost Project: Actual Total Cost/ Forecast Total Cost = Cost % Completed 73.27/1000=7.33% **7.33%*2000=$146.60For a combined Cost to Cost Project: Actual Total Cost for this budget item/ Forecast Total Cost for all Cost Categories on the project = Cost % Completed 73.27/4000=1.83% **1.83%*8000=$146.60For a combined Cost to Cost Project and Contract: Actual Total Cost for this budget item/ Forecast total cost for all Cost Categories on the contract =Cost % Completed 73.27/4000=1.83% **1.83%*8000 =$146.60For an Uncombined Effort Expended Project: Actual Total Quantity/Forecast Total Quantity= % Quantity Completed 1/10 =10% ** 10% *2000=$200For a Combined Effort Expended Project: Actual Total Quantity for this budget item/ Forecast Total Quantity for all Cost Categories = % Quantity Completed 1/20= 5% ** 5%*4000=$200For a Combined Effort Expended Project and Contract: Actual Total Quantity for this Budget Item/ Forecast Total Quantity for all Cost Categories on the Contract 1/40=2.5% **2.5%*8000=$200 ** Once the percentages are determined they are then multiplied by the forecast billing amount to determine a ‘recommended’ billing amount or revenue recognition amount. This article was TechKnowledge Document ID: 24694
