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Cost sheet is a statement, which shows various components of total

cost of a product. It classifies and analyses the components of cost of a


product. Previous periods data is given in the cost sheet for
comparative study. It is a statement which shows per unit cost in
addition to Total Cost. Selling price is ascertained with the help of
cost sheet. The details of total cost presented in the form of a
statement is termed as Cost sheet
M/S _______________________________

Cost sheet for the period_________________________

Quantity manufactured:- ___________________ Working Total Cost Cost


Quantity Sold:- ___________________ per unit

1) Cost of Materials Consumed:


Opening stock of Raw material
Add. Purchase of raw material
Add. Carriage inward
Less. Closing stock of raw material

2) Direct wages
3) Direct expenses

4) Prime cost (1+2+3)

5) Factory Over Heads


e.g. Power and fuel
Factory rent etc.
less sale of scrap

6) Gross factory cost (4+5)


Add. Opening stock of work in progress
Less. Closing stock of work in progress

7) Net work cost/ Net factory cost/


Factory cost/ Works cost.

8) Office and Administration Over


Heads
e.g. Office salaries
Printing and stationery etc.
9) Cost of production of goods
produced (7+8)

Add. Opening stock of finished goods


Less. Closing stock of finished goods

10) Cost of production of goods sold

11) Selling and Distribution Over


Heads.
e.g. Advertisement expenses
Door Delivery

12) Cost of Sales/ Total Cost (10+11)


13)Profit / Loss
14) Sales (12+13)
Question:
The following figures are extracted from the trial balance of
Gogetter on 30th Sep 2010.
Credi
Debit t
Inventories:
8000
Finished Stock 0
1400
Raw Materials 00
Work In 2000
Progress 00

Office 1740
Appliances 0
Plant & 4605
Machinery 00
2000
Buildings 00
7680
Sales 00
Sales Return and 1400
Rebates 0
Material 3200
Purchased 00
Freight Incurred on 1600
Materials 0
Purchase
Returns 4800
1600
Direct Labour 00
Indirect 1800
Labour 0
Factory 1000
Supervision 0
1400
Repairs and Up-keep - Factory 0
6500
Heat, Light and Power 0
Rates and
Taxes 6300
Miscellaneous Factory 1870
Exp 0
Sales 3360
Commission 0
Sales 1100
Travelling 0
Sales 2250
Promotion 0
Distribution Dept - Salaries 1800
and Exp 0
Office Salaries and
Expenses 8600
Interest on Borrowed
Funds 2000

Further details are


available:
Finished 1150
Goods 00
1800
Raw Materials 00
Work-in- 1920
Process 00

Accrued Expenses on:


Direct Labour 8000
Indirect Labur 1200
Interest on Borrowed
Funds 2000

Depreciation to be provided
on:
Office
Appliances 5%
Plant &
Machinery 10%
Buildings 4%

Distribution of the following


Costs:
Heat, Light and power to Factory, Office and Distribution in
the ratio 8:1:1
Rates and taxes two-thirds to Factory and
one-third to office.
Depreciaiton on Buildings to Factory, office and
selling in the ratio 8:1:1

With the help of the above information, you are


required to calculate
i) Cost of
Sales
ii) Selling and Distribution
Expenses
iii) Administration
Expenses

Solution:
(Rs.)
3200
Materials Purchased 00
Less: Returns 4800
3152
Net Materials 00
1600
Add: Freight 0
Opening Stock - 1400
Raw Mat 00
4712
00
Less: Closing Stock - 1800
Raw Mat 00
Raw Material 29120
Consumed 0

1600
Direct labour 00
16800
Add: Accrued Expense 8000 0

45920
Prime Cost 0

Factory
Overhead:
Indirect 1800
Labour 0
1920
Add: Accrued Expense 1200 0
Factory 1000
Supervision 0
Repairs of 1400
Upkeep 0
5200
Heat, Light and Power 0
Rates and
Taxes 4200
Misc. Factory 1870
Exp 0
Depreciation: 4605
Plant 0
Buil 5245 17005
ding 6400 0 0

Works Cost 62975


(Gross) 0
Add: Opening 2000
WIP 00
Less: Closing 1920
WIP 00 8000

Works Cost 63775


(Net) 0

Administrative
Overheads:
Heat, Light and Power 6500
Rates and
taxes 2100
Depreciation: Building 800
Office
Appliances 870
Office Salaries and
expenses 8600 18870

65662
Total Cost 0
Add: Opening
Finished Goods 80000
73662
0
Less: Closing 11500
Stock 0

Cost of Production of Saleable 62162


units 0

Selling and Distribution


Expenses:
Heat and light 6500
Depreciation: Building 800
Sales 3360
commission 0
Sales 1100
Travelling 0
Sales 2250
Promotion 0
Distribution Dept. 1800
Expenses 0 92400

71402
Cost of Sales 0
Example:

ABC Ltd., furnishes the following information for 10000 TV valves


manufactured during the previous
year:
(Rs.)
Materi
al 90000
Direct Wages 60000
Power and consumable
stores 12000
Factory Indirect Wages 15000
Lighting of
Factory 5500
Defective work (cost of
rectification) 3000
Clerical Salaries and Management expenses 33500
Selling
expenses 5500
Sale Proceeds of Scrap 2000
Plant repairs, maintenance and
depreciation 11500

Last year, the net selling price was Rs.31.60 per unit and all the units were
sold. As from April 1 of the
current year, the selling price was reduced to Rs.31 per unit. It was estimated
that production could be
increased in the current year by 50% due to spare capacity. Rates for materials
and direct wages would
increase by
10%.

You are required to prepare a statement of cost and profit for the current year,
assuming that 15000
units will be produced and sold during the year and that factory overheads will
be recovered as a %
of direct wages, and office and selling expenses as a percentage of
the works cost.
Soluti
on:

Project Statement of cost and profit for the current year (output
15000 units)
(Rs.) (Rs.)
Particulars Total Cost Cost per unit
14890
Material cost @ Rs.9.90 per unit 0 9.90
Direct Wages @ 6.60 per
unit 99000 6.60
24750
Prime cost 0 16.50
Add: Factory Overhead (0.75 of D.
Wages) 74250 4.95
32175
Works cost 0 21.45
Add: Office and selling overheads (0.20 X
Works cost) 64350 4.29
38610
Cost of sales 0 25.74
Estimated
profit 78900 5.26
46500
Sales revenue 0 31.00

Working Notes:
Determination of Factory
overheads:
Factory overheads (Previous year)
(Rs.)
Power and consumable
stores 12000
Factory Indirect wages 15000
Lighting of
Factory 5500
Cost of rectif. of defective work
(Considered normal) 3000
Plant repairs, maintenance and
depreciation 11500
Less: Sale of
Scraps 2000
Total 45000
Direct Wages 60000
Factory overheads as % of Direct
wages 75

Determination of Office and selling


overheads:
Works cost (Previous
year)
(Rs.)
Material Cost 90000
Direct Wages 60000
Factory overheads as
above 45000
19500
Works Cost 0

Office and selling overhead(33500


+ 5500) 39000
Office and selling overheads as % of Works
cost 20

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