Cost sheet is a document that provides for the assembly of an estimated detailed cost in respect of cost centers and cost units. It analyzes and classifies in a tabular form the expenses on different items for a particular period. Additional columns may also be provided to show the cost of a particular unit pertaining to each item of expenditure and the total per unit cost.
Cost sheet may be prepared on the basis of actual data (historical cost sheet) or on the basis of estimated data (estimated cost sheet), depending on the technique employed and the purpose to be achieved.
The techniques of preparing a cost sheet can be understood with the help of the following examples.
Example 1
Following information has been obtained from the records of left center corporation for the period from June 1 to June 30, 1998.
Cost of raw materials on June 1,1998 | 30,000 |
Purchase of raw materials during the month | 4,50,000 |
Wages paid | 2,30,000 |
Factory overheads | 92,000 |
Cost of work in progress on June 1, 1998 | 12,000 |
Cost of raw materials on June 30, 1998 | 15,000 |
Cost of stock of finished goods on June 1, 1998 | 60,000 |
Cost of stock of finished goods on June 30, 1998 | 55,000 |
Selling and distribution overheads | 20,000 |
Sales | 9,00,000 |
Administration overheads | 30,000 |
Prepare a statement of cost.
Solution:
Statement of cost of production of goods manufactured for the period ending on June 30, 1998.
Opening stock of raw materials Add-- purchase | 30,000 4,50,000 ------------ 4,80,000 15,000 | |
Less-- closing stock of raw material Value of raw materials consumed Wages Prime cost Factory overheads Add-- opening stock of work in progress Less-- closing stock of work in progress Factory cost Add-- Administration overhead Cost of production of goods manufactured Add--opening stock of finished goods | 4,65,000 2,30,000 6,59,000 92,000 7,87,000 12,000 7,99,000 --- 7,99,000 30,000 8,29,000 60,000 8,89,000 | |
Less-- closing stock of finished goods Cost of production of goods sold Add-- selling and distribution overheads Cost of sales Profit Sales | 55,000 8,34,000 20,000 8,54,000 46,000 9,00,000 |
Example 2
From the following information, prepare a cost sheet showing the total cost per ton for the period ended on December 31, 1998.
Raw materials Productive wages Direct expenses Unproductive wages Factory rent and taxes Factory lighting Factory heating Motive power Haulage Director’s fees (works) Directors fees (office) Factory cleaning Sundry office expenses Expenses Factory stationery Office stationery Loose tools written off | 33,000 35,000 3,000 10,500 2,200 1,500 4,400 3,000 1,000 2,000 500 200 800 750 900 600 | Rent and taxes (office) Water supply Factory insurance Office insurance Legal expenses Rent of warehouse Depreciation-- Plant and machinery Office building Delivery vans Bad debt Advertising Sales department salaries Up keeping of delivery vans Bank charges Commission on sales | 500 1,200 1,100 500 400 300 2,000 1,000 200 100 300 1,500 700 50 1,500 |
The total output for the period has been 10000 tons.
Solution:
Cost sheet for the period ended on December 31, 1998
Raw materials Production wages Direct expenses Prime cost Add--works overheads: Unproductive wages Factory rent and taxes Factory lighting Factory heating | 33,000 35,000 3,000 10,500 7,500 2,200 1,500 4,400 | 71,000 |
Motive power Haulage Directors’ fees (works) Factory cleaning Estimating expenses Factory stationery Loses tools written off Water supply Factory insurance Depreciation of plant and machinery Works cost Add-- office overhead Directors’ fees (office) Sundry office expenses Office stationery Rent and taxes (office) Office insurance Legal expenses Depreciation of office building Bank charges Office cost Add-- selling and distribution overheads Rent of warehouse Depreciation on delivery vans Bad debts Advertising Sales department salaries Commission on sales Upkeep of delivery vans Total cost Cost per ton $. 1,18,200/10,000 = $. 11.82 |