Cost Sheet

• A statement which is prepared to present

the detailed costs of total production
during a particular period.
• It provides information of cost per unit at
different stages of production.
• It also includes the figures of sales
revenue and profits.
• It indicates prime cost, factory or works
cost, cost of production and cost of sales
 Treatment of certain items
• Salvage Value of scrap material – cost of
production to be reduced from the sale proceeds
of scrap. If material is not processed then from
the cost of material issued otherwise from
factory cost.
• Defective products – if they are made saleable
after incurring a cost. If defect is on account of
normal reason then cost to be deducted from
factory cost otherwise from P & L account.
• By-product –the sale proceeds realised from by
product to be deducted from factory cost.
 Work in Process
• The adjustment of opening and closing
WIP to be made at appropriate stages.
• WIP opening and closing from the gross
factory cost to arrive at net factory cost
• Opening and closing finished stock should
be added and deducted from the cost of
production to arrive at the cost of goods
sold.
 Cost sheet statement
• Direct material + direct wages +other direct exp.
= Prime cost
• Prime cost +Factory overheads= factory cost
(gross) +op. WIP – Closing WIP = factory cost
(net).
• Factory cost+ Admin. overheads = cost of
production
• Cost of production+ op. fin. Stock – closing fin.
Stock = cost of goods sold
• Cost of goods sold + selling exp. = cost of sale +
profit = sales revenue.
 Numerical
• A toy manufacture sells 60,000 pieces @ rs. 15
each. The cost composition is Direct material
Rs.4, Direct wages Re.1, Works overheads Rs.6
(50%, fixed), sales overheads Re.1 (25%
variable)
• During current year he anticipates that fixed
charges will go up by 10%,direct labour by 20%,
direct material by 5% and selling price can not
be increased.
• He further obtains a order of 20,000 units. What
will be the minimum price to earn an overall
profit of Rs.1,83,500