v. Factory stationery, welfare expenses of the workers etc. These are added to Cost of Goods sold. Share Your Word File The following two conditions may be possible: The main advantages of cost sheet available to a manufacturing concern are as follows: Cost Sheet enables the manufacturer to ascertain exact cost per unit in a scientific manner. Repairs and maintenance of plants, machine tools, factory building. Form # ii. A cost sheet is a statement, prepared at given intervals of time, which provides information regarding elements of cost incurred in production. Sometimes, percentage of each item to total cost is also shown. When profit is added to the cost of sales, sales can be found out. Cost Sheet: Definition, Elements of Cost and Calculations! Damages received through a court of law. By disclosing the actual cost of production, the cost sheet provides the manufacturer with a reliable basis for fixing competitive selling price of his product. Cost statement is similar to cost sheet. (iii) Calculation of relationship of each element of expenditure to total cost. A cost sheet is an exercise in collection of information regarding all the costs incurred in the industry and arranging them in a certain order. These are the expenses incurred to get the raw- materials from the places of their sources to the purchasing industry. Various selling and distribution expenses are added to obtain cost of sales. Which of the following calculate the actual cost of product: a. then he wants to know the item-wise difference of cost regarding the sizes, shapes or quality of the product. Sometimes the amount of sales may not be given while information regarding profit calculation may be given. It reveals the cost per unit as well as total cost of output. The valuation of such work-in-progress is made on the basis of the value of material already used, the amount of wages paid for the work concerned and a proper share of factory expenses. The following expenses should not be taken anywhere in the cost sheet-. The amount of profit will be decided by management. While calculating the cost per unit, the costs should be divided by the actual units produced till the stage of cost of goods sold. Examples are Costs incurred on royalties, expenses on research & development, designing of patterns, jigs, hire charges of specialized machinery etc that are specific to a particular product. It is based on double entry principles, 4. If these are included it is called as “Statement of Cost and Profit”. The total is known as ‘Cost of Sales’. loss due to scrapping of a machinery before the expiry of its life. If a cost sheet shows the total cost and cost per unit, production account shows profit or loss, besides cost. It may be prepared on the basis of actual data (historical cost sheet) or on the basis of estimated data (estimated cost sheet depending on the technique of costing employed and the purpose to be achieved). It is also a periodical statement. 6. 60.60 Prime cost Factory overheads @ 75% of wages Works cost Office and selling expenses @ 20% or works cost Cost of sales Estimated profit (balancing figure) Sales (15000 x … Privacy Policy3. institute of innovation in technology and management cost accounting (bba-110) bba-ii semester practical assignment-1 “cost sheet” prepared by: ms. shilpa arora Here, the total cost should be calculated for the whole production time. Content Filtrations 6. But if sales value is given, the profit will be the difference between sales value and the total cost. (2) Works Cost is the aggregate of prime cost and works overhead. It ensures that all the costs are recovered and any desired profit is also obtained. The stock of finished goods or completed units is valued on the basis of Office Cost (or Cost of Production) and hence the adjustment for the stock of finished goods is made after ascertaining the Office Cost or Cost of Production. Selling and distribution overheads, and. Cost account is a ledger account maintained in the Cost Ledger on the principles of double entry. Every cost account is a part of integrated cost accounting system of the entire organisation. Profit as a percentage of selling price. The prime cost is the sum of direct labor and direct material costs of a business. On the basis of such percentage, the amount of profit is determined. Fines and penalties. 4. (iii) The cost sheet generally contains the following information –, (f) Details of overheads namely factory, office and administration and selling and distribution, and. Cost sheet is a statement prepared to show the cost of production in an industry in terms of total and also in several stages. It shows the various elements of cost that goes to make up the total cost. A. In other words ad expenses (other than direct materials and direct labour) incurred specifically for a particular product, job, department etc. Interest on debentures, bank loans, fixed deposits, mortgages, etc. Content Guidelines 2. Generally, this price is fixed after considering various factors such as: (ii) Variations in cost in the current period. (vii) It presents the volume and units produced during a particular period. 7. Expenses can be classified into Direct Expenses and Indirect Expenses. In such a case, amount of sales will be balancing figure.
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