COST SHEET FORMAT
Cost sheet is a device used to determine and present the cost under unit costing. Cost sheet format is a statement of costs incurred at each level of manufacturing a product or service. In a Cost sheet all the elements of cost is taken into consideration. It includes Prime cost, Factory/manufacturing cost, cost of production, cost of sale, Profit/loss etc.
ACCORDING TO C.I.M.A, LONDON
“Cost sheet is a cost schedule or document which provides for the assembly of the estimated detailed cost in respect of a cost center or cost unit”.
ACCORDING TO WHELDON
“Cost sheets are prepared for the use of management and consequently, they must include all the essential details which will assist the manager in checking the efficiency of production”
Items excluded from Cost Sheet:
1. Pure financial expenses like interest on capital, interest on loan, discount on debentures, loss on sale of fixed asset provision for bad debts and doubtful debts, writing off goodwill, copyright, preliminary expenses etc.
2. Pure financial incomes like interest received, profit on sale of investment, dividend received, rent received, commission received, discount received etc.
In addition to the above, no appropriation items will include in cost sheet.
COST SHEET FORMAT: Cost sheet for the period ending
| PARTICULARS | AMOUNT |
| Direct material Direct wages Direct Expenses | |
| Prime Cost | |
| Add: Factory Overheads | |
| Factory Cost | |
| Add: Administration Overheads | |
| Cost of Production | |
| Add: Selling and Distribution Overheads | |
| Total Cost /Cost of sale |
TREATMENT OF STOCK
While preparing a cost sheet we have to consider the opening and closing stocks of the following three items
- Stock of Raw materials
- Stock of finished goods
- Stock of work in progress
Stock of Raw materials: In order to get the cost of material consumed, opening stock of material is added to the cost of raw materials purchased and closing stock of raw materials is deducted from it.
| Opening stock of raw materials | |
| ADD: Purchase of raw material | |
| LESS: Closing stock of raw material | |
| Cost of materials consumed |
Stock of Work – in – progress: The Cost of work in progress are adjusted at the work cost stage
| PRIME COST cost sheet format PRIME COST | |
| ADD: Works Overhead | |
| ADD: Opening stock of work-in-progress | |
| LESS: Closing stock of work-in-progress | |
| WORKS COST |
Stock of finished goods: It is adjusted immediately after ascertaining the cost of production.
| Cost of production | |
| ADD: Opening stock of finished goods | |
| LESS: Closing stock of finished goods | |
| Cost of goods sold |
TENDERS OR QUOTATIONS
A tender or quotation is an offer made by a person to supply certain goods at a specified price. It is an estimated price which is determined in advance of production. A reasonable margin of profit is added to the estimated cost to get the tender price. A tender has to be prepared very carefully as the receipts of orders depend upon the acceptance of quotations or tenders supplied by the manufacturers. It requires information regarding Prime cost, works cost, administration and selling overhead cost and profit of the preceding period.
Computation of Tender price
I. Calculation of Tender price on the basis of Percentages of Overheads
In this case a cost sheet is prepared for the past period with the total amount of different elements of cost. Here Indirect or overhead costs are charged on a percentage basis. The percentage is calculated on the basis of the past year’s cost sheet. These are calculated as follows:
a. Factory OH is charged as a percentage if direct wages. =Factory OH x 100/Direct wages
b. Administration OH is charged as a percentage of Factory cost = Administration OH x 100/ Factory Cost
c. Selling and Distribution OH is charged as percentage of Factory cost = Selling and Distribution x 100/ Factory cost
Profit may be calculated either as a percentage of cost or selling price. If the given percentage of profit is on selling price, the percentage of profit on selling price should be converted into percentage of profit on cost.
II. Computation of Tender price on the basis of Previous year’s per unit cost:
Under this situation, previous periods cost and output figures are available. Tender price is fixed by multiplying the quantity with previous periods per unit cost and adding the required percentage of profit. There are three different situations under this method.
a. When there is no change in past cost and past percentage of profit: In this case a detailed probable cost sheet is prepared by multiplying previous period’s cost of each unit with the quantity of tender. Profit is added at the same percentage of profits of the past period.
b. When there is change in past cost, but no change in past percentage of profit: Here the cost of the tender is calculated by making necessary adjustments in the elements of cost. Same percentage of cost is added as profit to get tender price.
c. When there is change in past cost and past percentage of profit: Here the total cost tender is calculated by making necessary adjustments in the cost and the tender price is then calculated by adding the required percentage of profit.
III Calculation of Tender price based on fixed and variable costs: Here, costs are classified according to variability into three types,, fixed, variable and semi variable. Tender price is calculated on the basis of degree of variability.
