Cost sheet pdf

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INTRODUCTION. Dear students, welcome to the lecture series on Cost accounting. Today we shall cover the Cost sheets. The objective of this lecture is to. To understand the elements of cost. • To classify overheads on different bases. • To prepare a cost sheet. Elements of Cost. Raw materials are converted into. CLASSIFICATION OF COSTS: Manufacturing. We first classify costs according to the three elements of cost: a) Materials b) Labour c) Expenses. Product and.

Sometimes some of the units produced may be defective and such units or scrap or wastage is sold. The amount thus obtained should be deducted from factory expenses or from works cost. If, however, the materials when about to be used are found to be defective and then sold, the value of materials used should be reduced by the cost of such materials. The loss on sale of such defective materials should be debited to the Costing Profit and Loss Account. Such work is known as work-in-progress or work-in-process. 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. Since various units will be at different stages of production the value of work- in-progress will have to be estimated for each stage separately. The work-in-progress in the beginning is to be added to the current costs of production and that at the end of the period has to be deducted from the manufacturing cost.

Estimated Cost.

Help in cost control For controlling the cost of a product it is necessary for every manufacturing unit to prepare a cost sheet. The statement prepared before the commencement of production is called estimated cost sheet.

Estimated cost sheet helps in the control of material cost. Importance of Cost Sheet The importance of cost sheet is as follows: Cost ascertainment The main objective of the cost sheet is to ascertain the cost of a product. A statement of cost prepared after incurring the actual cost is called Historical Cost Sheet. Such cost sheet is useful in quoting the tender price of a job or a contract.

It helps in fixing selling price of a product or service by providing detailed information of the cost. Fixation of selling price To fix the selling price of a product or service. Cost sheet helps in ascertainment of cost for the purpose of determining cost after they are incurred.

Facilitates managerial decisions It helps in taking important decisions by the management such as: Notes Estimated Cost Estimated cost sheet is prepared on the basis of estimated cost. It also helps to ascertain the actual cost or estimated cost of a Job.

It is not necessary that all the material downloadd in a particular period is used in production Fill in the blanks with suitable words: It is also known as basic Components of total cost are as follows: Prime Cost It consists of direct material.. Opening stock of material is added and closing stock of raw material is deducted in the material downloadd and we get material consumed or used in production of a product.

Cost sheet is prepared on the basis of actual cost incurred It is calculated as: State the meaning of cost sheet. There is some stock of raw material in balance at opening and closing of the period..

Factory overheads consist of cost of indirect material. Direct Material: Material Consumed Opening stock of material Add: Material downloadd Material available for consumption Less: Closing stock of material Material consumed Direct Labour: Wages Direct Expenses: Rent of hire a special machine Prime cost Factory Cost In addition to prime cost it includes works or factory overheads.

Notes Cost of material downloadd Opening stock of material Closing stock of material Wages paid Rent of hire of a special machine for production Solution: Statement showing Prime Cost Details Factory cost is also known as works cost. Cost Sheet Illustration 2 Calculate factory cost from the following particulars: Statement showing Factory cost Details Direct Material: Material Consumed Direct Labour: Productive wages Direct Expenses Prime cost Add: Factory overheads Indirect Material: Unproductive wages Salary of a factory Manager Indirect Expenses: Factory rent Repair and Depreciation on Machine Factory cost 2.

These incomplete units are known as work-in-progress. Illustration 3 From the following information calculate the works cost.

Opening stock Closing stock Solution: Opening stock of work-in-progress Less: Notes ii Prime cost is also known as Hence the total cost of production is calculated as: The cost of opening stock of finished goods is added in the total cost of production in the current period and cost of closing stock of finished goods is deducted.

The cost of goods sold is calculated as: There is stock of finished goods in the opening and at the end of the period.

Statement showing total cost of production Details Amount Rs. When total cost exceeds sales. But, if the scrap is obtained in the course of manufacturing process, then the net amount realised from the sale of scrap should be deducted from the factory overhead or factory cost.

Items Excluded from Costs: The items of expenses, losses or incomes which are related to capital assets, appropriation of profits, amortization of fictitious or intangible assets, abnormal gains and losses or items of purely financial nature do not form part of the costs and these are excluded from cost accounts.

The examples of such items include— loss on sale of building or machinery, interest on capital, discount on issue or redemption of shares or debentures, expenses relating to previous period, cash discounts, bad debts, damages payable, penalties and fines, interest or dividend received on investments, transfer fees received, profit on sale of fixed assets, appropriation of profits such as income-tax, dividend paid, transfer of profits to reserves or funds, donations and charities, excess provision for depreciation on fixed assets, amortization of fictitious or intangible assets such as goodwill written off, preliminary expenses written off, patents, trademarks and copyrights written off, capital issue expenses, underwriting commission, loss on issue of shares and debentures written off, etc.

Thus, it should be noted that such items-are not taken into consideration excluded while preparing a cost sheet. Solution: Illustration 2: The following extract of costing information related to commodity X for the half year ended 30th June, Advertising, discount allowed and selling cost 75 paise per ton sold. You are required to ascertain: a The value of raw materials used b Cost of output for the period c Cost of turnover for the period d Net profit for the period e Net profit per tonne of the commodity sold.

Solution: Illustration 3: The directors of a manufacturing business require a statement showing the production results of the business for the month of March, The cost accounts reveal the following information: You are required to construct the statement so as to show: a The value of materials consumed; b The total cost of production; c The cost of goods sold; d The gross profit on goods sold and e The net profit for the month. Solution: Illustration 4: The following are the costing records for the year of a manufacturer: The manufacturer decided to produce 1, units during the year The rate of profit will remain the same.

Prepare a cost statement for the year showing the profit and selling price per unit.

Sale of Waste Scrap. Opening Stock of Finished Goods Less: Non-cost items are those items which do not form part of cost of a product. Such items should not be considered while ascertaining the cost of a product. These will not come in the cost sheet.

Cost Sheet: Definition, Elements of Cost and Calculations

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