A WIP Calculator is a must for Percentage of Completion calculations. Many times, business owners will create a simple Under/Over Billings report with Percent Complete calculations – and that’s fine for some businesses.
However, when the percentage-of-completion is the method of accounting that is required, the accounting principle of full disclosure requires the presentation of a work-in-process schedule in a company’s financial statements – and you also need to provide this information to your bonding company. This schedule should provide the details of each contracts or projects stage of completion and profitability to date as well as in the current period of reporting. Its format varies, but at a minimum should include at least the following seven components.
- Contract Totals
- Totals through the end of the prior year
- Actual accumulated contract totals through the end of the current year
- Over/Under billings
- Totals for the current year
- Percent complete on the job
- Balance to finish
You can easily create a detailed WIP/Percentage of Completion Schedule from QuickBooks IF:
- You create an Estimate for EVERY job/project AND there is only one Estimate per job
- You’ve modified the QuickBooks Estimate Template to include Cost and Markup columns and you utilize those columns when building your Estimate
- All of your “Items” have been set-up to capture BOTH revenue and costs (double-sided items)
- You enter ALL job related employee time and vendor costs using double-sided items
- You create Job Types for WIP, Over/Under and Completed (with sub-types for years) and assign them correctly to your jobs
If all of these things currently exist in your QuickBooks company data file, you can easily create a detailed WIP/Percentage-of-Completion schedule by creating an Actual vs. Estimate Summary Report –> exporting it to QuickBooks and then plugging that data into our WIP Calculator – all WITHOUT spending hours performing manual calculations!
Don’t use QuickBooks, that’s ok too, you’ll just need to plug the following numbers for each job into our WIP Calculator:
- Est. Cost
- Act. Cost
- Est. Revenue=Total Contract Value
- Act. Revenue
- Total Revenues Earned – Prior Year
- Cost of Revenue – Prior Year
WIP Calculations can be Easy!
That’s right, I said EASY! Watch the video to find out more: