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Hi Mike,
Can you please explain why we include cost of plant in total costs when we want to see if contract profitable or not. And then later in amounts due from customers calculation we take only material costs and depreciation on plant? Why we do not charge the customer cost of plant?
Customer IS charged with the cost of the plant – that cost would be in the negotiated contract value
What are the overall costs of the contract? All the labour, all the material and the cost of the plant. That’s why we include the cost of the plant in our calculations when trying to establish whether a loss is forecast
Ok?
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