Its Very Easy to Memorise the Cost Sheet Step 1 Always set in mind the basic Funda of COST

SHEET and its Basic Format Particulars Direct material Direct labour Direct expenses Prime cost (+) Factory overheads Factory cost (+) Administration overheads Cost of production (+) Selling and distribution overheads Cost of sales (+) Profit Sales/ Selling Price Step 2 Remind the formulas 1. Prime Cost = Direct material +Direct Labour + Other Direct Expenses 2. Factory cost = Prime Cost + Factory Overheads (OR) Factory cost = Direct material +Direct Labour + Other Direct Expenses + Factory Overheads 3. Cost of Production = Factory cost + Administrative Overheads (OR) Cost of Production = Direct material +Direct Labour + Other Direct Expenses + Factory Overheads + Administrative Overheads 4. Cost of Sales = Cost of Production + Selling and Distribution Overheads Cost of Sales = Direct material +Direct Labour + Other Direct Expenses + Factory Overheads + Administrative Overheads + Selling and Distribution Overheads 5. Profit= sales Cost of Sales Profit= sales Direct material +Direct Labour + Other Direct Expenses + Factory Overheads + Administrative Overheads + Selling and Distribution Overheads Step 3 Add the Relevant Cost to particulars like follow Particulars Amount Rs. Total Rs. Opening stock of Raw Material --(+) Purchase of Raw Material --(-) Closing Stock of Raw Material --Material Consumed -- Direct labour/Wages Direct expenses
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Amount

Particulars

Amount Rs. Total Rs. Prime cost

(+) Factory overheads/ Works Oheads Indirect Materials-Oil, water, gas, steam --Indirect Labour-foramen, helper etc --Factory Rent and Rates --Factory Lighting and Heating --Factory Expenses --Factory or Work Manager's Salary --Other Factory Expenses --Power and Fuel --Repairs and Maintenance --Cleaning --Drawing Office Expenses --Cost of Research and Equipments --Depreciation of Factory Plant --Factory Stationery --Insurance of Factory --(+)Opening Stock of work in progress --(-)closing stock of work in progress --Factory cost --(+) Administration overheads Office Rent and Rates --Office Salaries --Lighting and Heating --Office Stationery --Postage and Telegrams --Office Insurance --Legal Charges --Depreciation of Furniture and Office --Equipments and Buildings Audit Fees --Bank Charges and Commission --(+) Opening Stock of Finished Goods --(-)Closing Stock of Finished Goods --Cost of production --(+) Selling and distribution overheads Showroom Rent and Rates Salesmen's Salaries Salesmen's Commission Sales Office Rent and Rates Travelling Expenses of Salesmen Warehouse Rent and Rates
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Particulars Amount Rs. Total Rs. Advertisement Expenses --Carriage Outwards --Sales Manager's Salaries --Warehouse Staff Salaries --Repairs and Depreciation of Delivery Van --Sample and Free Gifts --Bad debts, Debt Collection Expens --Cost of sales -- (+) Profit Sales/ Selling Price

Cost of Sales () Number of Units = Cost Per Unit Point to Remember 1. The opening stock of Raw Material, WIP and Finished good are always Added and Closing Stock of Raw Material, WIP and finished good are subtracted from respective heading like Raw Material Purchase, Factory Expenses and Cost of Production 2. Some Expenses derive from Financial Statement are not recorded in Cost Sheet are as Follow Interest on capital Dividend paid or Proposed Bad Debts Preliminary expenses written off Legal Charges Over-valuation of stock in cost book Goodwill written off 3. Sometimes we need to find out some expenses in relation to other like Indirect Expense may be based on Direct Material/Direct Labour/factory expenses

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