Analysis of the Components of Total Cost

An analysis of the total cost of production and cost of sales is carried out by preparing “Cost sheet”. A Cost sheet is an important document prepared by the costing department.

Cost sheet is prepared to analyse the components of total cost, thereby determining (i) prime cost, (ii) works cost, (iii) cost of production, (iv) cost of sales and (v) profit. All aspects discussed are presented in the format or specimen of a cost sheet which is shown inTable 1.6:

Specimen of Cost Sheet

COST SHEET

For the period ended….

Particulars

Amount (Rs.)

1. Direct Material

–

2. Direct Labour

–

*13. Direct Expenses

–

4. PRIME COST (Add 1 + 2 + 3)

××

5. Add: Factory overhead

–

6. WORKS COST (or) FACTORY COST {Add 4 + 5}

××

*27. Add: Administration overhead

–

8. COST OF PRODUCTION (6 + 7)

××

9. Add: Selling and distribution overhead

–

10. TOTAL COST (or) COST OF SALES

××

11. PROFIT

–

12. SALES

××

Cost Sheet Depicting Components of Total Cost

ABC Co Ltd. is engaged in the manufacture of product “P”. Its records reveal the following data for 31 March 2010:
Direct Wages: Rs. 20,000
Factory overhead: 125% of direct wages
31 March 2009 Rs.

31 March 2010 Rs.

Raw Materials

10,000

12,000

Work-in-progress

15,000

17,000

Finished goods

30,000

25,000

Administration overhead

5,000

Purchases

70,000

Selling overhead

7,000

Sales for the year

1,50,000

Prepare a cost statement.