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    Cost Accounting

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    saswatimishra62
    This document provides an overview of cost sheets, including: - A cost sheet records all production and sales costs to help set product prices and measure performance over time. - It describes how to prepare a cost sheet using previous or estimated costs and the components included. - The main components are prime costs, work costs, cost of production, cost of sales, and total cost. - Cost sheets are important for determining costs, calculating cost breakdowns, setting prices, comparing costs over time, controlling costs, and decision making.

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    Cost Accounting

    Uploaded by

    saswatimishra62
    43 views13 pages
    This document provides an overview of cost sheets, including: - A cost sheet records all production and sales costs to help set product prices and measure performance over time. - It describes how to prepare a cost sheet using previous or estimated costs and the components included. - The main components are prime costs, work costs, cost of production, cost of sales, and total cost. - Cost sheets are important for determining costs, calculating cost breakdowns, setting prices, comparing costs over time, controlling costs, and decision making.

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    This document provides an overview of cost sheets, including: - A cost sheet records all production and sales costs to help set product prices and measure performance over time. - It describes how to prepare a cost sheet using previous or estimated costs and the components included. - The main components are prime costs, work costs, cost of production, cost of sales, and total cost. - Cost sheets are important for determining costs, calculating cost breakdowns, setting prices, comparing costs over time, controlling costs, and decision making.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    43 views13 pages

    Cost Accounting

    Uploaded by

    saswatimishra62
    This document provides an overview of cost sheets, including: - A cost sheet records all production and sales costs to help set product prices and measure performance over time. - It describes how to prepare a cost sheet using previous or estimated costs and the components included. - The main components are prime costs, work costs, cost of production, cost of sales, and total cost. - Cost sheets are important for determining costs, calculating cost breakdowns, setting prices, comparing costs over time, controlling costs, and decision making.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 13

    Abstract

    A cost sheet is a statement that records all the costs a business


    incurs from production to sales. Using this information, a
    company can fix the price of its products and services. The main
    advantage of a cost sheet is that you can compare it with
    previous cost sheets to measure performance. We can then
    decide whether the cost of an item can be increased or decreased
    according to our costs.

    We can prepare a cost sheet using previous cost sheet or current


    estimated costs. A pervious costs sheet shows us the actual costs
    incurred for producing, storing, and selling a product. Using
    estimated values, we can produce a cost sheet just before the
    production beings. However, there may be several changes in the
    estimate and the final figures.
    INDEX

    SI. No. Title of the Work

    1 Cost sheet

    2 Cost sheet format

    3 Different Types of Costs

    4 Componenet of cost sheet

    5 How to prepare a cost sheet

    6 Cost sheet example

    How do we collect data for creating cost sheets?


    COST SHEET
    A cost sheet is a statement that records all the costs a business incurs from production to sales. Using
    this information, a company can fix the price of its products and services. The main advantage of a cost
    sheet is that you can compare it with previous cost sheets to measure performance. You can then decide
    whether the cost of an item can be increased or decreased according to your costs.

    COST SHEET FORMAT


    DIFFERENT TYPES OF COSTS
    Costs are of four types:

    1. Fixed costs
    These costs are fixed, that is, they do not change according to the number of products.
    The price of your land or equipment are some examples of fixed costs.

    2. Variable costs
    These costs vary according to the number of products. Raw material and labour are some
    examples of variable costs.

    3. Operating costs
    Your business incurs these costs to maintain production daily. Utility costs, office
    supplies, travelling costs, etc. fall under this category.

    4. Direct costs
    These costs are directly connected to production. For example, if a car company
    produces a car in four days, the raw materials and labour involved in the production
    form the direct cost of the car.
    COMPONENTS OF A COST SHEET
    Let us see what the different costs mean on a cost sheet:

    1. Prime Costs
    Under this header, you have to record all the expenses involved in the production
    process. This is also known as basic or first cost.

    For example, if you have a textile store, your prime costs will be the costs of purchasing
    fabric from weavers, employee salaries, packaging, implements needed to measure and
    cut cloth, etc.

    The formula for calculating prime costs is:

    Prime Costs= Direct Labour + Direct Raw Material+Direct Expenses

    2. Works Cost
    Works cost is the sum of prime costs and overhead costs including factory expenses.
    Overhead costs are those costs that are not directly related to the production of a product
    but are required nevertheless. For example, you need to pay electricity bills to keep your
    production going. Similarly, there are several other taxes and utility costs that fall under
    the overhead costs category.

    3. Cost of Production
    Under this header, you should include all the expenses involved in business operations,
    including rents and work costs. The formula for calculating the cost of production is:

    Cost of Production= (Work Costs) + (Administration Overhead Costs) - (Opening and


    Closing Stock of Finished Goods)

    4. Cost of Sales
    Cost of sales or total cost contains the details of all the expenses involved in the
    production and other costs involved in selling and distribution. This value will help you
    understand how much you spend on a product according to the resources used for
    producing it. You can decide your selling price according to the cost of sales and know
    how much profit you will earn from it.

    HOW TO PREPARE A COST SHEET?


    Here is a step-by-step guide to preparing a cost sheet:
    Step 1:
    Prime Cost = Direct Material Consumed + Direct Wages + Direct Expenses

    Direct Material Consumed = Direct Material Purchased + OP Stock of Raw Material –


    CL Stock of Raw Material

    Step 2:
    Works Cost = Prime Cost + Factory Overheads + OP Stock Work in Progress – CL
    Stock Work in Progress

    Step 3:
    Cost of Production = Works Cost + Office and Administration Overhead + OP Stock of
    Finished Goods – CL Stock Finished Goods

    Step 4:
    Total Cost = Cost of Production + Selling and Distribution Overheads

    Profit: Sales – Total Cost

    COST SHEET EXAMPLE


    Suppose you are preparing a cost sheet for an automobile company for the year 2020-21. You have to
    consider the following information to prepare a cost sheet:

     Direct material consumed – INR 30,00,000


     Opening stock of raw materials – INR 18,00,000
     Closing stock of raw materials – INR 2,00,000
     Direct wages – INR 20,00,000
     Direct expenses – INR 10,00,000
     Factory overhead – 100% of direct wages
     Office and administration overhead – 20% of works
     Selling and distribution overhead – INR 10,00,000
     Cost of opening stock for finished goods – INR 2,50,000
     Cost of closing stock for finished goods – INR 3,50,000
     Profit on cost – 20%

    IMPORTANCE OF COST
    SHEET
    Cost sheets are extremely important in the following ways:

    1. They help determine the final cost


    The main aim of preparing a cost sheet for your business is that it helps you determine
    the accurate cost of the product. You can use cost sheets to calculate the total cost as
    well as the cost per unit of a product.

    2. They help in calculating the cost break up for each product


    Using a cost sheet, you can understand how the costs for a product are broken up. For
    example, you can get the actual material costs, tax costs, and so on.

    3. They help in deciding the selling price


    You can use a cost sheet to calculate the selling price of a product according to the
    materials and resources you have invested in the product.

    4. They help in comparing costs


    You can compare the costs of products from previous years with the costs of the current
    year. If you can take any action to reduce the current year’s costs, you can take it by
    studying cost sheets.

    5. They help control costs


    A cost sheet gives you a perspective on the costs incurred by your business to produce
    and sell a product. You can monitor and control production and marketing costs. An
    estimated cost sheet will give you an idea of individual costs at each step of production.

    6. They help in decision-making


    Cost sheets are one of the first documents you need to prepare and study to ensure that
    your production takes place smoothly. A cost sheet can guide you to make correct
    business decisions.

    7. They help in budgeting


    Using cost sheets, you can prepare a robust budget that will help your business run
    smoothly. You can prepare a budget using historical data or estimated data.

    How do we collect data for creating cost sheets?


    You can create cost sheets using historical data. i.e., data from previous cost sheets or
    using estimated data, i.e., data of the current year.
    BIBLIOGRAPHY
     Cost Accounting
     Friends
     Teacher
     google

    MAHARAJA PURNACHANDRA HIGHER


    SECONDARY SCHOOL, BARIPADA

    BUSINESS STUDIES
    AND
    MANAGEMENT
    PROJECT WORK
    (2023-24)
    “COST ACCOUNTING”
    Name of the Student
    Rasmita Marandi
    Roll no-IC22-191(Commerce)
    Regd. No-22H5368557

    Internal Examiner

    External Examinar Signature of Student

    CERTIFICATE

    This is to certify that Rasmita Marandi of class-XII


    (Commerce) successfully completed the Topic of COST
    ACCOUNTING under the Guidance of khirodini Naik
    Madam during the academic year of 2023-24
    Acknowledgement
    I would like to express my special thanks of gratitude to my teacher
    as well as our principal who gave me the golden opportunity to do
    this project of COST ACCOUNTING, which also helped me in
    doing a lot of research and I came to know new things about it.
    Without their help, guidance and support it would have been
    impossible to complete this project.
    Secondly, I would also like to thank my parents and friends who
    helped me a lot in finishing this project within limited time. I am
    making this project not only for marks but also to increase my
    knowledge.
    Once again thanks to all who helped me in doing this project.

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