Here are some notes on the distinction between job and contract costing, progress payments, retention money, and escalation clause in detail:
Job and Contract Costing
Job costing and contract costing are two methods of costing that are used to determine the cost of a product or service. Job costing is used to determine the cost of a specific job or order, while contract costing is used to determine the cost of a specific contract.
Progress Payments
Progress payments are payments that are made to a contractor during the course of a contract. Progress payments are typically made based on the percentage of work that has been completed.
Retention Money
Retention money is a portion of the final payment to a contractor that is withheld until the contract is complete and all defects have been remedied. Retention money is typically withheld for a period of one year after the contract is complete.
Escalation Clause
An escalation clause is a provision in a contract that allows for the price of the contract to be adjusted based on changes in the cost of materials or labor. Escalation clauses are typically used in contracts that involve long-term projects, where the cost of materials or labor is likely to change over time.
Conclusion
Job costing and contract costing are two methods of costing that are used to determine the cost of a product or service. Job costing is used to determine the cost of a specific job or order, while contract costing is used to determine the cost of a specific contract. There are some key differences between job costing and contract costing, including the scope of the work, the duration of the work, the cost estimation, the cost control, and the cost reporting.