Cost Sheet
Cost Sheet
Cost Sheet
The main objective of this project is to show how to obtain an accurate product cost. It gives
us both the total cost and cost per unit of a product. And in case of fixing the selling price of a
product, we need to create a cost sheet so we can see the details of its production cost.
Contents :
Introduction
Conclusion
INTRODUCTION
A cost sheet is a statement that shows the various
components of total cost for a product and shows previous data for comparison.
You can deduce the ideal selling price of a product based on the cost sheet.
2. Fixing selling price: In order to fix the selling price of a product, you need to
create a cost sheet so you can see the details of its production cost.
1. Fixed cost: These are costs that do not change based on the number of items
produced. For example, the depreciating value of a building or the price of a
piece of equipment.
2. Variable cost: These costs are tied to a company’s level of production. For
example, a bakery spends Rs.10 on labour and Rs.5 on raw materials to produce
each cake. The variable cost changes based on the number of cakes the
company bakes.
4. Direct costs: These costs can be directly associated with production. For
example, if a furniture manufacturing company takes five days to produce a
couch, then the direct cost of the finished product includes the raw material cost
and labor charges for five days.
Advantages of Cost Sheet:
1. Prime cost: This comprises direct material, direct wages, and direct
expenses. It is also called basic cost, first cost, or flat cost. It can be defined as
an aggregate of the price of the material consumed, the wages involved in
production, and the direct expenses.
2. Factory cost: This is made up of prime cost plus factory overhead, which
includes indirect wages, indirect material and indirect expenses. Factory cost is
also known as works cost, production cost, or manufacturing cost.
3. Office cost: This is also called administration cost or total cost of production.
Office cost is equal to factory cost plus office and administration overhead.
4. Total cost or cost of sales: This is the sum of the total cost of production and
the total of selling and distribution overhead.
From the following information ascertain the Works Cost for the month of August
1997:
Conclusion:
References: