COST SHEET

COST UNIT :
A unit of quantity of a product,
service or time in relation to which
costs may be ascertained or
expressed.

Cost unit can be a:

 Simple unit
 Composite unit
SINGLE OUTPUT /UNIT COSTING
It is the method of costing in which costs
are ascertained per unit of a single
product in a continuous manufacturing
activity.

 Production is uniform and continuous

affair.
 Units of production are identical.
 WHAT IS A COST SHEET?
 Statement which shows components of total cost.
 Shows per unit cost in addition to total cost.
 Classifies and analyses the cost components.
 Helpful in ascertaining selling price.
 Useful for period comparisons.
 Communicates cost information to all levels.
 Watch and control over cost.
 Can be prepared on the basis of historical cost or
estimated cost

Overall it is a detailed statement showing the

subdivisions of cost arranged in a logical order
under different heads, presented to the
management.
COMPONENTS OF TOTAL COST:
 Prime cost
 Factory cost
 Cost of production
 Cost of goods sold
 Cost of sales
 Sales
BUILDING A COST SHEET
Prime Cost = Direct Material + Direct Labour + Direct Expenses

Material Consumed = Opening Stock of material + Materials

Purchased - Closing stock of material

Factory Cost = Prime Cost + Factory overheads

Total Cost of Production = Factory Cost + office and

administration overheads
Cost of goods sold = Total Cost of Production + Opening stock
of Finished Goods - Closing stock of Finished Goods
Total Cost = Cost of Goods sold + Selling and distribution
overheads
Sales = Total Cost + Profit
 COST SHEET-ILLUSTRATION 1

Calculate prime cost from following particulars.

Rs.
Cost of raw material purchased 30000
Opening stock of raw material 6000
Closing stock of raw material 4000
Wages Paid 3000
Rent for hiring special machine for production 5000
 COST SHEET-ILLUSTRATION 1
Solution
Direct Material:Raw Material consumed Rs.
Opening stock of Raw Material 6000
Add:Material Purchased 30000
Material available for consumption 36000
Less:Closing stock of Raw Material 4000
Direct Material Consumed 32000
Direct Labour:Wages 3000
Direct Expenses:Hire of special Machine. 5000
Prime Cost 40000
 COST SHEET-ILLUSTRATION 2
Calculate Factory cost from the following particulars:
Material Consumed 60000
Productive wages 20000
Direct expenses 5000
Consumable stores 2000
Oil/grease/lubricants 500
Salary of factory manager 6000
Unproductive wages 1000
Factory rent 2000
Repair and depreciation on machine. 600
COST SHEET-ILLUSTRATION 2
Solution
Statement showing factory cost Rs.
Direct Material:Material Consumed 60000
Direct Labour:Productive wages 20000
Direct Expenses 5000
Prime Cost 85000
Add:Factory overheads
Indirect Material
Consumable stores 2000
Oil/grease/lubricants 500 2500
Indirect Labour
Salary of factory manager 6000
Unproductive wages 1000 7000
Indirect Expenses
Factory rent 2000
Repair and depreciation on machine. 600 2600
Factory Cost 97100
 Material Movement in Maruti Suzuki Limited

Stores Factory FG Yard

Raw Material What do Finished Goods
1.Steel Roll you have 1. Alto
2.Engine Block here? 2.Wagon R
3.Other Components 3.Swift
4.Paints 4.SX-4
 ADJUSTMENT FOR WORK IN PROGRESS

 In the process of production some units remain to be

completed at the end of a period. These incomplete units
may be at various stages in the production process and
are known as Work-in-progress (WIP). Also known as
semi finished goods

 The cost of incomplete units include direct material,

direct labour , direct expenses and factory overheads.

 To find out factory cost of the finished product, it is

necessary to make adjustment of opening and closing
stock of WIP.
 Production Process at Maruti Suzuki Limited

Steel Roll Press Shop Weld Shop Paint Shop Finished Body
Roll is cut and Sheets are welded The body is dipped
pressed into together to make the into chemicals and
sheets of body depending on paint after which it is
suitable shape the vehicle to be polished and dried.
produced

Engine Block Machine Shop Finished Engine

The engine block is
machined

Other Components

Finished Vehicle Assembly Line

COST SHEET-ILLUSTRATION 3

From the following information calculate the works cost

Direct Material 80000

Direct Labour 22000
Direct Expenses 5000
Factory overheads 12000
Work in progress:opening stock 13000
Work in progress:closing stock 7000
COST SHEET-ILLUSTRATION 3

Solution
Statement showing factory cost Rs.
Direct Material:Material Consumed 80000
Direct Labour:Productive wages 22000
Direct Expenses 5000
Prime Cost 107000
Factory overheads 12000
Factory Cost(Gross) 119000
Add:Work in progress:opening stock 13000
132000
Less:Work in progress:closing stock 7000
Works or Factory cost(net) 125000
COST SHEET-ILLUSTRATION 4

From the following information calculate the

total cost of production

Direct Material 90000

Direct Labour 32000
Direct Expenses 9000
Factory overheads 25000
Office and Administration overheads 18000
COST SHEET-ILLUSTRATION 4
Solution
Statement of total production cost Rs.
Direct Material:Material Consumed 90000
Direct Labour:Productive wages 32000
Direct Expenses 9000
Prime Cost 131000
Factory overheads 25000
Factory Cost(Gross) 156000
Office and Administration overheads 18000
Total cost of production 174000
 COST OF GOODS SOLD

It is not necessary, that all goods produced in a period are

sold.There is stock of finished goods in the beginning and
end of the period.The cost of opening finished goods is
added in the total cost of production in the current period
and cost of closing stock is deducted.The cost of goods
sold is calculated as under:

Cost of goods sold = Total Cost of Production + Opening

stock of Finished Goods - Closing stock of Finished Goods
 COST OF GOODS SOLD

Cost of producing one car 10000 $

Period 1 Period 2 Period 3
No. of cars Cost of cars No. of cars Cost of cars No. of cars Cost of cars
Opening stock of cars 0 - 100 1,000,000 300 3,000,000
Add:Cars Produced 1000 10,000,000 1200 12,000,000 1500 15,000,000
Minus:Cars Sold 900 9,000,000 1000 10,000,000 1600 16,000,000
Closing Stock of cars 100 1,000,000 300 3,000,000 200 2,000,000

Opening stock of cars 0 - 100 1,000,000 300 3,000,000

Add:Cars Produced 1000 10,000,000 1200 12,000,000 1500 15,000,000
Minus: Closing Stock of cars 100 1,000,000 300 3,000,000 200 2,000,000
Cars Sold 900 9,000,000 1000 10,000,000 1600 16,000,000
COST SHEET-ILLUSTRATION 5
From the following information calculate the cost
of goods sold

Total cost of production 122000

Opening stock of finished goods 12000
Closing stock of finished goods 16000

Solution
Cost of Goods sold Rs.
Total cost of production 122000
Add:Opening stock of finished goods 12000
Less:Closing stock of finished goods 16000
Cost of Goods sold 118000
 COST OF SALES

If selling and distribution overheads are added to the total cost

of production, total cost is arrived at.This cost is also termed as
cost of sales.Total cost is calculated as:

Total Cost or Cost of sales = Cost of Goods sold + Selling and

distribution overheads
 COST SHEET-ILLUSTRATION 6

From the following information calculate the total

cost / Cost of sales

Direct Material 160000

Direct Labour 52000
Direct Expenses 19000
Factory overheads 45000
Office and Administration overheads 28000
Selling and distribution overheads 33000
COST SHEET-ILLUSTRATION 6
Solution
Statement of total cost/ Cost of sales Rs.
Direct Material:Material Consumed 160000
Direct Labour:Productive wages 52000
Direct Expenses 19000
Prime Cost 231000
Factory overheads 45000
Factory Cost(Gross) 276000
Office and Administration overheads 28000
Total cost of production 304000
Selling and distribution overheads 33000
Total cost / Cost of sales 337000
 COST SHEET-ILLUSTRATION 7

From the following information calculate the value

of goods sold

Total Cost of Production 145000

Opening stock of finished goods 22000
Closing stock of finished goods 6000
Selling and distribution overheads 25000
Profit 22000
COST SHEET-ILLUSTRATION 7
Solution
Statement of value of goods sold Rs.
Total Cost of Production 145000
Add:Opening stock of finished goods 22000
167000
Less:Closing stock of finished goods 6000
Cost of goods sold 161000
Selling and distribution overheads 25000
Total Cost 186000
Profit 22000
Sales 208000
 There is no prescribed format of a cost sheet .It may change from
industry to industry. A specimen is given below:

A. Materials Consumed
Purchases
Add:Opening stock of Raw Material
:Expenses on Purchases
Less:Closing stock of Raw Material
Direct Material Consumed
B. Direct Labour (Wages)
C. Direct Expenses
D. Prime Cost(A+B+C)
E. Factory/Works Overheads
Add:Opening Stock of Work in Progress
Less:Closing Stock of Work in Progress
F. Works/Factory Cost(D+E)
G. Office and administration overheads
H. Total Cost of Production(F+G)
Add:Opening Stock of finished goods
Cost of goods available for sale
Less:Closing Stock of finished goods
I. Production Cost of goods sold
J. Selling and distribution overheads
K. Cost of sales(I+J)
L. Profit
M. Sales(K+L)
 COST SHEET-ILLUSTRATION 8

From the following information prepare a cost sheet

for the period ended on 31st March 2006
Opening stock of raw materials 12500
Purchase of raw materials 136000
Closing stock of raw material 8500
Direct wages 54000
Direct expenses 12000
Factory overheads(% of direct wages) 100%
Office & Admin overheads(% of works cost) 20%
Selling and distribution overheads 26000
Opening stock of finished goods 12000
Closing stock of finished goods 15000
Profit on Cost 20%
COST SHEET-ILLUSTRATION 8
Cost Sheet
Direct Materials Rs. Rs.
Opening stock of raw materials 12500
Add:Purchase of raw materials 136000
Less:Closing stock of raw material 8500 140000
Direct Wages 54000
Direct Expenses 12000
Prime Cost 206000
Factory overheads(100% of direct wages) 54000
Works/Factory Cost 260000
Office & Admin ovhds(20% of works cost) 52000
Total Cost of Production 312000
Add:Opening stock of finished goods 12000
Cost of goods available for sale 324000
Less:Closing stock of finished goods 15000
Cost of goods sold 309000
Selling and distribution overheads 26000
Total Cost / Cost of Sales 335000
Profit on Cost(20%) 67000
Sales 402000
 COST SHEET-ILLUSTRATION 9
From the following information prepare a cost sheet for the
period ended on 31st March 2006
Opening stock of raw materials 20000
Purchase of raw materials 122000
Closing stock of raw material 10000
Direct wages 36000
Direct expenses 24000
Factory overheads(% of direct wages) 50%
Office & Admin overheads(% of works cost) 20%
Selling and distribution overheads(per unit sold) 3 Rs.
Opening stock of finished goods 500 units
Opening stock of finished goods (value) 12500
Units produced during the period 12000
Closing stock of finished goods 1500 units
Profit on selling price 20%
Find out the selling price per unit.
 COST SHEET-ILLUSTRATION 9
Units Produced= 12000 Unit
Direct Materials Rs. Rs. Cost(Rs)
Opening stock of raw materials 20000
Add:Purchase of raw materials 122000
Less:Closing stock of raw material 10000 132000 11.00
Direct Wages 36000 3.00
Direct Expenses 24000 2.00
Prime Cost 192000 16.00
Factory overheads(50% of direct wages) 18000 1.50
Works/Factory Cost 210000 17.50
Office & Admin ovhds(20% of works cost) 42000 3.50
Total Cost of Production 252000 21.00
Add:Opening stock of finished goods 12500
Cost of goods available for sale(12000+500 units) 264500
Less:Closing stock of finished goods 31500
Cost of goods sold(11000 units) 233000 21.18
Selling and distribution overheads 33000 3.00
Total Cost / Cost of Sales 266000 24.18
Profit on Sales-20% ie 25% on cost 66500 6.05
Sales 332500 30.23