PREPARATION OF COST SHEET AT CORPORATE LEVEL

BALBHARTHI’S M.J.P COLLEGE OF COMMERCE• SUBMITED TO:- Prof. MONICA CHANDIWALA• PRESENTED BY:-• ZEEL MATHKIYA 19• DHARMIK MEHTA 20• SEJAL MEHTA 21• HIRNI MEWADA 22• VARUN MODI 23• SIDDHI NALAWADE 24

MEANING OF COST SHEET

• Cost sheet is a statement of cost. In other words, when costing information are set out in the form of a statement, it is called cost sheet. For determination of total cost of production a statement showing the various elements of cost is prepared. This statement is called as a ‘statement of cost’ or ‘cost sheet’.

ELEMENTS OF COST SHEET

• Cost of production.• Material consumed.• Direct wages & salaries.• Direct expenses.• Work overhead.• Administration overhead.• Selling overhead.• Distribution overhead.

Conti….

• Valuation of stock of WIP & finished goods.• Treatment of scrap & waste.• Miscellaneous income.• Interest & financial charges.• Abnormal & non recurring cost.

PREPARATION OF COST SHEET• Calculation of Materials Consumed:

Materials Consumed = (Opening stock of raw materials + Purchase of raw material + carriage inward) - (closing stock of raw material).

• Calculation of Prime Cost:

Prime Cost = Materials consumed + direct wages + direct expenses.• Calculation of Factory cost:

Factory Cost = Prime cost + sum of all factory overheads.• Calculation of Cost of Production

Cost of Production = Factory cost + office and administration overheads.

• Calculation of Cost of Sales or Total CostTotal Cost = Cost of production + selling and distribution overheads.

• Calculation of Total SalesTotal Sales = Total cost + net profit.

FORMAT OF COST SHEETParticulars Amount Amount

Opening Stock of Raw MaterialAdd: Purchase of Raw materials Add: Purchase Expenses Less: Closing stock of Raw Materials

Raw Materials Consumed Direct Wages (Labour) Direct Charges

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Prime cost (1)   ***Add :- Factory Over Heads:

Factory Rent Factory Power Indirect Material Indirect Wages

Supervisor Salary Drawing Office Salary Factory Insurance Factory Asset Depreciation

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Works cost Incurred   ***Add: Opening Stock of WIP Less: Closing Stock of WIP

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Conti….Works cost (2)   ***Add:- Administration Over Heads:-

Office Rent Asset Depreciation General Charges Audit Fees Bank Charges Counting house Salary Other Office Expenses

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Cost of Production (3)   ***Add: Opening stock of Finished Goods Less: Closing stock of Finished Goods

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Cost of Goods Sold   ***Add:- Selling and Distribution OH:-

Sales man Commission Sales man salary Traveling Expenses Advertisement Delivery man expenses Sales Tax Bad Debts

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Cost of Sales (5)   ***Profit (balancing figure)   ***Sales   ***

COST SHEET OF BRITANIA BREADPROFORMA OF COST SHEET

Cost sheet for every 1lac units produced and sold.

Cost Per UnitQuantity Manufactured 1 100000Quantity sold 1 100000

CPU(Rs)DIRECT COSTRaw materials consumedOpening stock of raw materials 0Purchases of Raw Materials 5.805(-)Closing stock of Raw Materials 0Materials Consumed 5.805Direct labour/wages 0.124Direct cost/expenses 0.2415

PRIME COST 6.1705

Conti….INDIRECT COSTFactory/Works OverheadsIndirect labour 0.122Depreciation on Machinery 0.675Works Overheads 0.05204Cost of Maintanence 0.0589Other Factory Expenses 0.0282Supervisors Salary 0.0385Power & Fuel 0.5678Total Overheads 1.54244

FACTORY COST/WORKS COST 7.71294

Office and Administrative OverheadsDepreciation on office furniture@7% 0.0281Office Rent 0.0585Salary to Staff 0.089Office and General Expenses 0.0257

Conti….Telephone expenses 0.0219

Electricity and Lightings 0.03123

Printing and stationary 0.00294

Total Office and Administrative Overheads 0.25737

COST OF GOODS SOLD 7.97031

Selling and Administrative Overheads

Sales Commission 0.705

Salary of Salesman 0.1

Carriage Outward 0.12798

Sales Expenses 0.057

Total Selling and Administrative Overheads 0.98998

COST OF SALES 8.96029

PROFITS 1.03971

SALES 10

Conti….

Raw Materials Cost

Flour 3.756

Water 0.892

Yeast 0.6789

Salt 0.4781

Raw Materials per unit 5.805

 

NOTE

The Value are determined on the basis of apportionment as the company produces more than one product (including fixed cost)

Cost sheet for every 1lac units produced and sold.

COST SHEET ANALYSIS

• Direct Costs :• Direct materials: To manufacture one unit of bread the following

RAW MATERIALS are required.• Flour• Water• Yeast• Salt

• Direct labor/wages: Direct labor/Wages amounts to Rs. 0.124 per unit which is approximately 2.009% of the PRIME COST. This percentage is low because a good amount of work is automated as a result of which Human resources are diverted to more productive areas such as SALES and MARKETING

Conti….• Depreciation on machinery: The depreciation is calculated on the

basis of WDV calculated @ 10% p.a. This value amounts to around 43.7% of the FACTORY OVERHEADS. The percentage high because of the level automation and technology used for production.

• Power : Per unit power and fuel consumption is Rs. 0.5678.• Other factory expenses: Other factory expenses include

maintenance of factory and other miscellaneous expenses.

• Office and Administration Overheads: Office and administration overheads include Depreciation on office furniture@7%, office rent, salary to staff, office and general expenses, Postage and Telegrams, telephone expenses, electricity and lightings• Salary to staff: The salary paid to staff comes up to around Rs.

0.089 per unit cost.

Conti….• Direct cost/expenses: Direct cost includes costs incurred in

bringing the raw materials into the factory which is Carriage inward. It also includes the amount paid loading unloading charges and other petty expenses.

• Indirect Costs:• Factory Overheads: The Factory Overheads includes the indirect

labor, Depreciation on Machinery, Works Overheads, Cost of Maintenance, Other Factory Expenses, supervisors Salary and Power & Fuel.

• Indirect labor: The amount of indirect labor is Rs. 0.122 per unit. This value includes sweeper charges, support staff etc.

Conti….• Office and general expenses: This comprises of refreshments (tea and

snacks), Postage and Telegrams and other petty expenses.• Printing and stationary: This consists of photocopy charges, printouts and

other stationary items.• Telephone Expenses: Calls made by the staff members.• Electricity and lightings: It consists of office lighting and air conditioning

expenses

• Sales and distribution overheads:- Selling and distribution cost includes Sales Commission, Discount allowed, Salary of salesmen, Carriage outward and Sales expenses• Sales Commission :As a part of encouragement for sales people,

they are given commission of 5 % of the total sales done by them.

• Discount allowed :To attract whole sellers to buy the product they are offered a discount of 5% on the selling price.

Conti….• Salary of salesmen :The average salary paid to the sales people is

around Rs. 0.1 of the total per unit cost of the product.• Carriage outward :To carry the finished goods to the whole

sellers, the transportations charge per unit/product is set as RS 0.12798.

• Sales expenses :This includes expenses incurred on advertisements and promotional expenses such as newspaper advertisements, hoardings, TV commercials etc.

• Profit: The Profit arise out of selling per unit of the product is 10.3971% of the total per unit cost price

CONCLUSION