PARUL INSTITUTE OF MANAGEMENT & RESEARCH

Faculty Guid :-

Prof. Divyang Joshi

Submitted By :-

Disha Patel 27Kalpan Patel 28

Section : - C

SUB. :- Cost & Management Accountancy

A cost statement or cost sheet is a document which provides cost for the assembly of the detailed cost of cost object or cost centre.

It is a detailed statement which indicates the break-up of cost arrangement in logical manner under different suitable head.

Cost sheet

KALPAN PATEL

A cost sheet is a statement which shows the details regarding the total cost of a cost object, i.e. for the company as a whole, for a product or a job.

A cost sheet not only shows the total cost but also the various component of the total cost…..

Conti…….

KALPAN PATEL

It discloses the various elements of cost which make up the total cost.

It discloses the cost per unit as well as the total cost of output.

It facilities for preparation of tender price or selling price advance.

It comparison of current year’s total cost with the estimated cost and with the previous year’s cost.

Purpose of cost sheet:

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It shows the total cost amount and the cost per unit of production.

It is helpful for the purpose of cost comparison.

It facilities the fixation of the selling price of different products.

It helps in cost control by ascertaining the actual operational efficiency as compared to the standard or targeted competitors.

Advantages of cost sheet:

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Performa of cost sheet ( for the period from… to…. Of m/s…..)Particulars Total cost

Direct material cost: opening stock of raw material Add: purchase of raw material less: closing stock of material Cost of raw material consumed: Direct labour cost Direct expenses PRIME COST; Factory overheads COST OF OPERATING Add: opening stock of WIP Less: closing stock of WIP

XxxXxxXxxXxxXxxXxxXXXXxxXXXXxxXxx

Conti…….particulars Total cost

FACTORY COST: Office & Administration cost OFFICE COST / COST OF

PRODUCTION: Add: opening stock of finished goods Less: closing stock of finished goods COST OF PRODUCTION OF GOODS FOR

SALE Selling & distribution cost TOTAL COST Add: Profit/Loss SALES REVENUE

XXX Xxx XXX Xxx Xxx XXX Xxx XXX Xxx XXX

Kalpan Patel

Expenses are part of the cost which are not of the nature of material and labour but are incurred due to business activities. In short, the amount spend for running a business is termed as expenses.

Direct expenses can be directly linked with a specific saleable product or service.

The expenses that cannot be identified or linked or attributed or allocated directly to the finished saleable product or services are termed as INDIRECT expenses.

EXPENSES:

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PRODUCTION/ MANUFACTURING EXP: Production is the process of converting raw materials into finished goods through the use of labour, service & other facilities in factories.

The major elements of production cost are :

Direct labour costDirect material costDirect overhead

Conti…….

Kalpan Patel

ADMINISTRATION EXPENSES: It is the sum of those costs which are

related to the general administration activities and general management activities which cannot be directly related to production, marketing, research & development, and financing functions of the business.

Conti…….

Kalpan Patel

SELLING EXPENSES: The amount of money spent on

publicity and advertising, salesmen’s salaries and wages, sales executives’ salary, etc...

DISTRIBUTION EXPENSES: Cost incurred on delivering products

and other related activities, e.g. to facilitate movement of goods in the hands of purchaser or customers are called as distribution expenses..

Conti…..

Kalpan Patel

FINANCE EXPENSES: Finance costs are those which are

associated with external borrowed funds, e.g. interest paid or accrued on capital borrowed.

RESEARCH EXPENSES: Research exp. Are those which are

incurred in discovering of new ideas, new facts new application of accepted facts and improvement of existing products, process or equipments.

Conti….

Kalpan Patel

PRIME COST: Prime cost consists of three important

elements of costs, i.e direct materials cost, direct labour cost, and direct expenses. Generally, the prime cost constitutes the highest percentage of total costs.

FACTORY COST or WORK COST: It comprises of prime cost and factory

overheads or factory expenses which include indirect material cost , indirect labour cost and indirect expenses. Work

EXPENSES :

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cost denotes the expenses that are incurred in Converting raw material into finished products.

the sum of direct labour cost, direct expenses, & manufacturing or factory expenses is also referred to as a CONVERSION cost.

OFFICE COST OF PRODUCTION: Office cost is the aggregate of works

cost and office & administration expenses.

Conti……

Kalpan Patel

TOTAL COST OR COST OF SALES: When selling & distribution

expenses are added to office cost , it is known as cost of sales.

Total cost serves the purpose of fixing the selling price by adding markup on total cost or a profit margin on total sale. The markup indicates a % of profit on total cost.

Conti…..

Kalpan Patel

if the word using is ‘margin’, then it means it is a profit as % of sale price. This concept is accepted in the global market. By comparing the total cost of present year with the previous and/or the budgeted year, it is possible to analyse the total cost; and in turn control the cost , if it has gone up.

Conti……

Kalpan Patel

Thank you……….

Kalpan Patel