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Presented By:Prableen Singh Pulkit Gulati13BSP0545 13BSP0594
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Fixed Cost: It remains constant irrespective of the output up to capacitylimit.
Variable Cost: This cost varies according to the output.
Semi- Variable Cost: It remains constant up to a certain level andregisters change afterwards.
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Direct Material: It is the cost of raw material used for manufacturing a product. Direct Labour or Direct Wages: It is the amount paid to workers who are engaged in the
manufacturing line. Direct Expenses or Chargeable Expenses: It is the amount of expenses which is directly
chargeable to the product manufactured. (Eg: Design, Patent, Architects Fee, Special Machine
Hired etc.)
Administrative Expense: wages of workers in administration department, watch n warddepartment, sales department, general supervision.
Selling Expenses: It includes all expenses, incurred in connection with sales of finishedproduct and services.(Eg: Advertisement, Show room expenses, After sales service expensesetc.)
Distribution Expenses: Itinclude all expense, incurred in connection with making the goodsavailable to customers. (Eg: Packing charges, Loading charges, Carriages on sales etc.)
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For determination of total cost of production, a statement showing thevarious elements of cost is prepared.
Purpose Of Cost Sheet It gives the break up of total cost under different elements.
It shows total cost as well as cost per unit.
It helps in comparison with previous years.
It facilities preparation of tenders or quotations.
It enables the management to fix up selling price.
It controls cost.
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Prime Cost: It comprises of all direct materials, direct labour and direct expenses. Itis also known as flat cost.
Prime cost = Direct Materials + Direct Labour + Direct Expenses
Works Cost: It is also known as a factory cost or cost of manufacture.
Cost of Production: It represents factory cost plus administrative expenses.
Total Cost: It represents cost of production plus selling and distribution expenses.
Selling Price: It is the price which includes total cost plus/ minus of profit or loss.
Prime cost = Direct Materials + Direct Labour + Direct Expenses
Works Cost = Prime Cost + Factory Overheads
Cost of Production = Factory Cost + Administrative Expenses
Total Cost= Cost of Production + Selling & Distribution Expenses
Selling Price = Total Cost + Profit (-Loss)
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Determine the Total Cost
Determine the Product Price
Cost Reduction or Cost Control
Preparing Budgets
Profit Planning
Stage wise Cost Identification
Determine the Cost Per Unit
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