Unit 7: Cost Sheet

Dr. Md. Serazul Islam

Professor (Accounting)
School of Business
Bangladesh Open University, Gazipur
islamserazul@yahoo.com
 Cost Sheet/Statement of Cost
■ Cost sheet is a statement or document
which provides for the assembly for the
detailed cost of a cost center or cost unit.
It may have columns to show total cost,
cost per unit, together with the relevant
figures of the previous period.
 Cost Sheet (British/Old System)
Elements of Costs Tk. Tk.
1. Direct Materials/Raw materials used *
2. Direct Labour/Wages *
3. Direct Expenses *
4. Prime Cost (1+2+3) **
5. Factory Overheads *
Add: Opening Work-in-Progress *
Less: Closing Work-in-Progress (*)
6. Factory/Works Cost(4+5) **
7. Office & Administrative Overheads *
8. Cost of Production (6+7) **
 Cost Sheet
Elements of Costs Tk. Tk.
8. Cost of Production (6+7) **
Add: Opening Stock of Finished Goods *
Cost of Goods Available for Sale **
Less: Closing Stock of Finished Goods (*)
9. Cost of Production of Goods Sold **
10. Selling and Distribution Overheads *
11. Cost of Sales (9+10) **
12. Net Profit (Loss) *
13. Sales (11±12) **
Raw Materials Consumed/Used
Elements of Costs Tk. Tk.
Opening Stock of Raw Materials *
Add: Purchase of Raw Materials *
Carriage/Transportation/Freight in *
Import duty/Octroi Paid on RM *
Raw Materials Available for Production *
Less: Closing Stock of Raw Materials *
Raw Materials Used in Production **
 Cost Sheet
(American/Modern System)
Elements of Costs Tk. Tk.
1. Raw Materials used *
2. Direct Labor *
3. Direct Expenses *
4. Prime Cost (1+2+3) **
5. Manufacturing Overhead *
6. Manufacturing Cost(4+5) **
Add: Beginning Work-in-Process Inventory *
Cost of Goods Processed during the Year *
Deduct: Ending Work-in-Process Inventory *
7. Cost of Goods Manufactured **
 Cost Sheet
(American/Modern System)
Elements of Costs Tk. Tk.
7. Cost of Goods Manufactured **
Add: Beginning Finished Goods Inventory *
Goods Available for Sale *
Deduct: Ending Finished Goods Inventory *
8. Cost of Goods Sold (6+7) **
9. Selling and Distribution Expenses *
10. Office & Administrative Expenses *
11. Cost of Sales (8+9+10) **
12. Net Profit (Loss) *
13. Sales (11±12) **
In American or modern costing system, office and administrative
Overheads are treated as period costs , not product costs.
Raw Materials Consumed/Used
(American System)
Elements of Costs Tk. Tk.
Beginning Raw Materials Inventory *
Add: Purchase of Raw Materials *
Carriage/Transportation/Freight in *
Import duty/Octroi Paid on RM *
Raw Materials Available for Use *
Deduct: Ending Raw Materials Inventory *
Raw Materials Used in Production **
 Factory Overhead
■ Indirect materials, bolts, nuts, screws, thread, nails, lubricants, etc.
■ Indirect labor
■ Gas, steam, power, fuel, coal, haulage, lighting, heating, painting.
■ Rent, rates, taxes and insurance.
■ Works manager’s salary
■ Factory workers salary
■ Depreciation, repairs& maintenance
■ Oiling and cleaning of machines.
■ Technical director’s fees or remuneration.
■ Experimental and research expenses.
■ Cost of training the new employees.
■ Laboratory expenses.
■ Supervision, inspection and testing fees.
■ Municipal taxes.
■ Cost of rectifying defective output.
■ Drawing office expenses.
■ Gas turbine running cost.
■ Water treatment plant expenses.
■ Pay for holiday
■ Welfare expenses.
■ Employees state insurance.
 Administrative Overhead
■ Printing and stationery used in the office.
■ Office salaries.
■ Office rent, rates and insurance.
■ Office lighting, heating and cleaning.
■ Depreciation and repairs of office building.
■ Legal, bank, audit, postage and telephone charges.
■ Trade subscription / trade magazines.
■ General expenses.
■ Counting house expenses.
■ Hire of accounting machines.
 Selling Overhead
■ Salaries and commission to sales
personnel
■ Advertisement and publicity
■ Showroom/Warehouse expenses
■ Exhibition expenses
■ Bad debt
■ Collection charges
 Distribution Overheads
■ Rent, rates, warehouse insurance
■ Depreciation of delivery vans
■ Wages of dispatch clerks
■ Freight and insurance charges
■ Discount, commission and brokerage
■ Sample expenses
■ Expenses of catalogues and price lists
■ Insurance and taxes of finished goods
■ Warehouse wages
■ Parcels sent to customers
■ Road license for delivery vans
■ Carriage outward
 List the Items not to be
Included in the Cost Sheet
■ Dividend & Interest received
■ Rent received
■ Cash discount allowed
■ Interest on debentures
■ Commission received
■ Interest on capital
■ Profit /loss on sale of fixed assets
■ Fine or penalty paid for breach of contract
■ Compensation payable to employee
■ Income tax and wealth tax
■ Donation
■ Cash discount received
■ Bonus to employees
■ Underwriting commission
■ Brokerage
■ Preliminary Expenses Written off
■ Discount on shares & Debentures
■ Commission to Partners, Managers, etc.