COST SHEET

• Cost sheet ?
• Purpose and objectives
• Fixed vs Variable
COST SHEET - DEFINITION
• A statement of costs incurred at every level of manufacturing a product or
service

• Categories of Cost – 1. Direct cost

2. Indirect Cost

Direct Cost is the cost incurred by the firm which can be ascertained and
measured for a product
Classified into 3 categories –
(i) Direct Material
(ii) Direct labour = PRIME COST
(iii) Direct Expenses
• Indirect cost can be ascertained but not measured in case of a
product.
• 3 categories of Indirect cost are:-
(i) Indirect Material
(ii) indirect Labour
(iii) indirect expenses
Examples :
1. Wood in Wooden furniture
2. Cotton in production of yarn
3. Oiling and waste material for the maintenance of machine
4. Employees working for manufacturing a product
5. Inspector’s cost
6. Excise duty, octroi duty
7. Rent of factory, salesmen salary
 FACTORY COST = PRIME COST +
FACTORY OVERHEADS

• Wages for foreman

• Electric power
• Storekeeper’s wages
• Oil & water
• Factory rent
• Repairs & renewals
• Depreciation of plant & machinery
COST OF PRODUCTION = FACTORY
COST+ADMINISTRATIVE OVERHEADS
• Office rent
• Office – repairs
• Office lighting
• Office depreciation
• Manager’s salary
• Telephone charges
• Postatge, stationery, telegram
COST OF SALES = COST OF PRODUCTION +
SELLING OVERHEADS
• Salesman salary
• Carriage outwards
• Salesman commission
• Travelling expenses
• Advertising
• Free samples
• Ware housing
• Delivery charges
SALES = COST OF SALES + MARGIN OF PROFIT
Ex:1 From The following data draft the cost sheet

1st Jan 31st Jan

Cost of raw materials 60000 50000
Cost of WIP 24000 30000
Cost of Finished goods 120000 110000
Purchase of raw materials 900000
Wages paid 460000
Factory overheads 184000
Administration overheads 60000
Selling overheads 40000
Sales 1800000
 COST SHEET
Particulars Rs. Rs.
Opening stock of RM 1st jan
+purchase of RM
- Closing stock of RM 31st Jan
= RM consumed during the year
+wages paid
= PRIME COST
+Factory overheads
+ opening stock of WIP
- Closing stock of WIP
= Factory or works Cost
+Administration overheads
= Cost of Production
+opening stock of FG
- Closing stock of FG
= Cost of goods sold
+selling overheads
• COS
• + Net profit
• = SALES
 EX.2
• Prepare cost statement of sudhir Co., Ltd from the followiing details

Particulars 1/4/2009 31/3/2010

Cost of RM 80000 100000
Cost of FG 200000 300000
Cost of WIP 20000 28000

Indirect labour 100000 Administrative exp 200000

Oil & water 20000 Electricity 60000
Insurance on fixtures 6000 Direct labour 600000
Purchase of RM 800000 Dep. on Machinery 100000
Sales commision 120000 Factory rent 120000
Salaries of salesman 200000 Property tax on plant 22000
Carriage outward 40000 Sales 2400000
 EX-3

• RM consumed -- Rs 30000
• Direct labour charges – Rs.18000
• Machine hours worked --- 1800
• Machine hour rate --- 10
• Administrative o/hs – 20% on Works Cost
• Selling o/h ---Re.1 p.u
• Units produced --- 26400 units
• Units sold --- 25000 units @ Rs.8 p.u
EX-4

FG (1/1/2003) 50000 RM (1/1/2003) 10000

WIP (1/1/2003) 14000 Direct labour 160000
Purchase of RM 98000 Indirect labour 40000
Heat, light, power 20000 Factory rent, Insurance 5000
& taxes
Repairs to plant 3000 Factory supplies 5000
Dep- factory building 6000 Dep – plant 10000
Factory cost of goods 280000 Rm CONSUMED in 95000
produced in 2003 2003
Cost of goods sold in 2003 160000