Here's another way to calculate revenues earned using the percentage of completion method. Just thought I'd share.
***DISCLAIMER***
This formula only works for profitable projects!
The formula:
(Cost to Date / (1 - estimated gross profit %)
Example:
If your estimated gross profit percentage on an open project is 20% and your cost to date on the project is $75,000, then revenues earned is $93,750 [75,000 / (1 - .20)].
Now, if the revenues earned is more than our billings to date, then we are underbilled. If revenues earned is less than our billings to date we are overbilled.
Thanks!
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