COST SHEET VS PRODUCTION ACCOUNT

Cost statement may be presented in the form of ledger account termed as “production account”. Production account presents information of production cost in an analytical manner according to double entry system. Cost of production and profit can be computed in this ledger.

Cost Sheet Vs Production Account is as follows:

BASIS OF DIFFERENCE	COST SHEET	PRODUCTION ACCOUNT
FORM	It is prepared in the form of a statement.	It is prepared like an account
DOUBLE ENTRY	It is not based on double entry system.	It is based on double entry system and there are debit and credit side.
PERIOD	It is prepared with a view ascertain total-cost as well as per unit cost of production.	It is prepared after completion of production.
COMPARATIVE STUDY	Comparative study for two periods or two type of production is feasible.	Such comparative study is not possible in these methods.
COMPARISON WITH FINANCIAL ACCOUNTS	Results cannot be compared with financial account’s results.	Results can be compared with financial account’s results.
COST ANALYSIS	Detailed analysis of cost is made to control different elements of cost, viz. material, labor and expenses.	Different items of cost are shown as totals and are not analyzed.

COST SHEET

Cost sheet is a device used to determine and present the cost under unit costing. It 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.

Form of a Cost Sheet: 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

PRODUCTION ACCOUNT

If the details of cost sheet or production statement are shown in the form of a ledger account, it is known as production account. Besides cost of production it also includes selling and distribution expenses. It is prepared in three parts – the first part gives the cost of production, the second part gives the cost of goods sold and the third part shows cost of sales or total cost for the period. A specimen of a Production Account is as follows:

Also Study	Also Study	Also Study	Also Study
Cost Accounting	Scope of cost accounting	Elements of cost	Types of cost
Material control	Perpetual inventory system	Pricing of materials	Bin Card
Stores Ledger	Incentive plans	Overheads	Idle time
System of wage payment in cost accounting	Time rate vs piece rate wage system	Cost Center	Labour Turnover
Difference between management accounting and cost accounting	Allocation and apportionment of overheads	Allocation vs Apportionment of overheads	Absorption of overheads
Over absorption and under absorption of overheads	Activity based costing	Traditional costing vs ABC system	Reconciliation of accounts
Unit costing	Cost sheet format	Cost sheet vs production sheet	Job costing
Batch Costing	job costing vs batch costing	Contract costing	Job Costing vs Contract costing
Process Costing	Process costing vs job costing	Joint products	By Product
Equivalent production	Marginal costing	Application of marginal costing	Cost volume profit analysis
Tools and techniques of marginal costing	Budget	Break even point	Process of budgetary control
Advantages and limitations of budgetary control	Budgetary Control	Zero base budgeting	Standard Costing
Variance Analysis	Standard costing vs budgetary control	Management accounting vs cost accounting	Cost accounting vs financial accounting