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&
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Statement of Cost
Or
Cost Sheet
Presented by,

Group 1
What is the statement of cost?

It is a statement designed to
show the output of a
particular accounting
period alongwith break- up
costs
Advantages of maintaining the
statement of cost :
• Discloses the total cost and cost
per unit
• Close watch and control
• Comparative study
• Formulating a definite useful
production policy
• Fixing up the selling price
 Specimen of Cost Sheet and
Statement of Cost.
Total cost Cost per unit
Rs. Rs.
Direct materials
Direct labour
Direct expenses

PRIME COST
Add : works overhead

WORKS COST
Add : administration overhead

COST OF PRODUCTION
Add : selling and distribution overheads

TOTAL COST OR COST OF SALES

DIVISIONS OF COST :
PRIME COST

WORKS COST

 COST OF PRODUCTION

COST OF GOODS SOLD

 TOTAL COST OR COST SALES

PRIME COST = Direct Material +
Direct Wages + Direct Expenses

COST OF RAW MATERIAL

CONSUMED =
Material Purchased + Opening Stock of
Raw Materials - Closing Stock of Raw
FACTORY COST = Prime Cost +
Factory Overheads.

FACTORY COST = Prime Cost +

Factory Overheads + Opening Stock of
Work-in-Progress – Closing Stock of
Work-in-Progress
COST OF PRODUCTION = Factory
Cost + Office and Administration
Expenses.

COST OF GOODS SOLD = Cost of

Production + Opening Stock of Finished
Goods – Closing Stock of Finished
Goods.
TOTAL COST = Cost of Goods Sold +
Selling and Distribution Expenses
 ILLUSTRATION
 The following costing information relates to commodity “A”for the half year
ending 31st dec 2009 RS. RS.
 Purchase of raw materials 1,20,000 Stock(31st dec 2009)
 Works overheads 48,000 Raw materials 22,240
 Direct wages 1,00,000 Finished products 32,000
 Carriage on purchases 1,440 (2000 TONS)
 WIP(1ST JULY,2009) 4,800
 Stock(1st july 2009) WIP(31ST DEC,2009) 16,000
 Raw materials 20,000 Sales 3,00,000
 Finished products 16,000
 (1,000 TONS)

 Selling and Distribution overheads are RE.1 per unit sold.16,000 tons of
commodity were produced during the period.

 PREPARE A STATEMENT OF COST?