COST SHEET THEORY
Cost sheet is prepared to calculate cost of production and net profit of the firm excluding financial expenses. First part is similar to manufacturing account with additional of administration overheads and selling & distribution overheads.
| If
work in progress is at prime cost, then it will be shown after “RAW MATERIAL
CONSUMED” |
|
<<<< Financial expenses are not to be taken in cost sheet >>>>
For example >>> Discount allowed, Discount received ; Provision for bad debt; Provision for
Discount
allowed ;
Commission paid; |
<<<< If closing stock of finished good is not given then
follow the formula
CLOSING STOCK = Cost of production / Total units produced x Units left Total
units produced =
Sale + Closing stock
- Opening stock
Remember - All should be in units |
DIRECT EXPENSES.
wages ; Royalty on production ; Chargeable expenses ; other direct expenses ; Hire charges on special plant tool; Primary packing ; Productive &Manufacturing wages . |
FACTORY OVERHEADS.
Factory
expenses ; Power & Fuel; Coal & Gas ;
Lightning ; Indirect wages ; Work
manager salary ; Supervision salary ; salary of factory guards ; Lubricant oil; Cotton
based ; Bonus to factory worker ; Work expense ; Secondary packing ; Indirect
material ; Depreciation on factory asset. |
OFFICE & ADMINISTRATIVE OVERHEAD.
Salaries
; Postage & telegram ; Trade expenses ; Misc. expenses ;Office rent ; Printing
& stationary ; Insurance ; Bonus to office employees; Rent & Taxes ; Depreciation
on office asset . |
|
SELLING &
DISTRIBUTION OVERHEAD
Advertisement ; Conveyance ; Bad debt ; Salesman salary ; Salesman
commission ; |
CALCULATIONS___________lifo & FIFO METHODS________
FIFO :- first in first out (Perishable goods)
LIFO :- last in last out( Non-perishable goods)
NOTES to be kept in mind.............
----
Administrative expenses are calculated on “TOTAL
UNITS PRODUCE”
----
Selling & Distribution expenses/overheads
are
calculated on” TOTAL UNITS SOLD”
---- Calculation of Cost Per Unit.
** Upto cost of production total divide the amount by total units produce.
** Opening & closing stock of finished goods divide the amount by units given in the sum.
** From cost of goods sold till end divide each figure by total units sold.
EXPLANATION with EXAMPLES of each method----------------------------
|
Value of closing stock (under fifo method )
For
example- Cost of production
– 75000
No
of units produce – 15000 Opening stock of finished goods (2000 units) – 7000 Closing stock of finished goods ( 2500 units)- ? Then Closing stock= Cost of production / Total units produced x Units left 75000 / 15000 x 2500 Answer = 12500 |
|
Value
of closing stock (under fifo method) For
example- Cost of production – 75000
No
of units produce –15000 Opening stock of finished goods (2000 units) – 7000 Closing stock of finished goods ( 2500 units)- ? Then Closing stock= Cost of production / Total units produced x Units left 75000 / 15000 x 500 2500.
Value of Closing stock >>
7000+2500 = 9500 (answer) |
|
If the goods sold on 20% profit
Let Selling price be 100;
then cost price is 80 If Selling price is 100 ; cost price is 100/80If Selling price is186300 cost price is
186300/80 x 100
=232875
(assumed that the Selling price is 186300 ) |
If the goods sold on20% above cost.
Then - 20/100*186300 = 37260
COST OF SALES - 1,86,300 NET PROFIT 37260 SALES - 223560 |