Gray Ltd. is engaged in the business of constructing towers since 15 years. Alpha Ltd gave a contract to Gray Ltd. for construction of 2 towers.…

Gray Ltd. is engaged in the business of constructing towers since 15 years. Alpha Ltd gave a contract to Gray Ltd. for construction of 2 towers. Contract price for 2 towers is agreed at 160 crore. (each tower has contract price of 80 crore) At the time of contract, Gray Ltd has estimated that the contract cost will be 141 crore. It is assumed that construction will be completed in 3 years. At the end of year 1, Gray Ltd has revised the construction cost to 150 crore. At the beginning of year 2, the customer has requested for a variation in the contract. Customer now wants construction of 3 towers instead of 2 towers. The term of the contract will not change, construction of all the towers will be completed simultaneously. As a result of this variation, contract price will increase by 80 crore and contract costs will increase by 75 crore. Gray Ltd has decided to measure the stage of completion on the basis of the proportion of contract costs incurred to the total estimated contract costs. Contract costs incurred at the end of each year is: Year 1:35.25 crore. Year 2:148.5 crore (including unused material of 2.25 crore) Year 3: Total Revised contract costs. Based on the information given in above Case Scenario, answer the following Question 1 - 3: