How does Bumble Roofing recognize revenue on fixed-price commercial roofing contracts?
Bumble_Roofing Franchise · 2025 FDDAnswer from 2025 FDD Document
Bumble-LA's commercial roofing services are provided through discrete project agreements. The contracts are awarded on a competitively bid and negotiated basis. The Company's contracts generally include a single performance obligation for which revenue is recognized over time, as performance obligations are satisfied, due to the continuous transfer of control to the customer. For cost-plus fee contracts, the Company recognizes revenue when services are performed and contractually billable based upon the hours incurred and agreed-upon hourly rates as well as subcontractor costs and materials cost. Revenue on fixed-price contracts is recognized and invoiced over time using the cost-to-cost percentage-of-completion method.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 53)
What This Means (2025 FDD)
According to Bumble Roofing's 2025 Franchise Disclosure Document, revenue recognition for commercial roofing contracts depends on the contract type. For cost-plus fee contracts, Bumble Roofing recognizes revenue when services are performed and contractually billable, based on hours incurred, agreed-upon hourly rates, subcontractor costs, and materials costs. However, for fixed-price contracts, the revenue recognition method differs.
Specifically, Bumble Roofing recognizes revenue on fixed-price commercial roofing contracts over time using the cost-to-cost percentage-of-completion method. This means that as Bumble Roofing incurs costs on a project, it recognizes a corresponding percentage of the total contract revenue. For example, if the company estimates a project will cost $100,000 and bills the client a fixed price of $150,000, and they have incurred $50,000 in costs, they would recognize $75,000 in revenue (50% of the total contract price).
This approach allows Bumble Roofing to match revenue with expenses as the project progresses, providing a more accurate picture of the company's financial performance. It also ensures that the company is not recognizing all the revenue upfront before the work is actually completed. This method is commonly used in industries with long-term projects, such as construction and engineering, to provide a more consistent and representative view of financial performance over the duration of the project.