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=$146.60
For 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=$146.60
For 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 =$146.60
For an Uncombined Effort Expended Project:
Actual Total Quantity/Forecast Total Quantity= % Quantity Completed
1/10 =10%
** 10% *2000=$200
For 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=$200
For 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
