Cost Ascertainment

Cost
Amount of Expenditure (actual or notional) incurred or attributable to a given thing- material purchased

Cost Object Anything for which a measurement of cost is desired It could be a product, Service, Customer, Brand, Activity, Department

Cost Assignment Tracing Accumulated Costs that have direct relationship to a cost object & allocating accumulated costs that have an indirect relationship to a cost object Allocation & Apportionment

Cost Accumulation Collection of Cost Data in some organized way by means of an accounting system  Keeping Cost Accounts

Cost Unit

 A unit of Quantity of product, service or time in relation to which costs may be expressed  It is unit of Measurement of Cost Automobile Cloth Sugar Tele-call Power Transport -number -metre -Quintal -minute/seconds -KW/H T/KM

Cost Centre
A Location, person ,or item of equipment or group of these for which costs may be ascertained and used the purpose of Cost Control Personal or Impersonal Cost Centre Production And Service Cost Centre Operation and Process Cost Centre

Components Of Total Cost

Prime Cost Total Of DMC,DLC & DE Factory Cost or Works Cost - Prime Cost +Factory Overheads Office Or COP- Factory Cost +AOH Total Cost - COP+ Selling & Distribution OH

Cost Accumulation

sales
PROFIT

cos
SD overhead

COP
A.Overhead

F Cost
Prime Prime Cost Cost
D. Expenses F. Overhead

COP
F Cost

cos

D .Labour
D Materials

Prime Cost

Components Of Total Cost

Direct Materials+ Direct Labor+ Direct Expenses

Prime Cost Or Direct Cost Factory Or Works Or Manufacturing Cost

Office Cost Or Cost Of Production

Prime Cost+ Factory Over Heads

Factory Cost +Administration Overheads

COP +SD Overheads

Cost Of Sales +Profit

Total Cost Or Cost Of Sales Selling Price Or Sales

Cost Sheet
Reveals Total Cost Of Production Per Unit Discloses Break Up Of Total Cost Helps in Preparation Of Estimate Helps in Fixing Sales Price Comparison Of Costs

Few Instructions for Preparation Of Cost Sheet

COST SHEET
Name of the Company ---------------------------Cost Sheet of (Name of the Product) ----------------For the period ending ------------------------------

Units-Total (Rs.) Per Unit (Rs.)

Particulars
Opening Stock of Raw Materials Add : Purchases Expenses on Purchases Less: Closing Stock of Raw Materials Value of raw materials consumed Director Labour Direct Expenses

Prime Cost
Factory Overheads :

Add OP stock OF WIP Less Cl. Stock of WIP

Factory Cost
Office & Administration Overheads + Opening Stock Of FG -Cl Stock Of FG

Cost of Production
Selling and distribution Overheads

Cost of Sales
Profit Sales

Production Account/Statement Particulars

Amount Rs

Particulars

Amount Rs

To Direct Materials Cons. By Cost Of Production C/d -----------To Direct Lab our To Direct Expenses Prime Cost -----------To Factory Overheads Factory Cost ---------To O A Overheads To Cost Of Prod b/d To Opening Stock Of FG To Cost Of Goods Sold b/d --------By Cost Of Sales Sales c/d To SD Overheads To Cost Of Sales b/d To Profit By Sales ------------------By CL Stock Of FG By Cost Of Goods Sold C/d

Preparation Of Cost Sheet

1 Computation Raw Materials Consumed 2 Computation Of Value of Work In Progress 3 Computation Of Value Of Finished Materials 4 Computation Of Profit 5 Estimation Of Overheads 6 Treatment Of Scrap/By Product 7 Treatment Of Shortage of FG 8 Treatment Of Subsidy

Preparation Of Cost Sheet

1 Computation Of Raw Materials Consumed Opening Stock Of Raw Materials Add Purchases Of Raw Materials Expenses On Purchase ----------------------------------Less Closing Stock Of Raw Materials----Defective Materials Returned ----Abnormal Wastage Of RM -----Cost Of Raw Materials Consumed

---------------------

Preparation Of Cost Sheet

2 Computation Of Value Work In Progress Consists of Cost Of Materials To date Cost Of Labor to date Factory Overheads to date Value At Prime Cost Valued At Factory Cost Prime Cost Add Opening Stock Of WIP Less Closing Stock Of WIP Factory Cost Direct Materials Direct Labour Direct Expenses +OP Stock Of WIP -CL Stock Of WIP Prime Cost

Preparation Of Cost Sheet

3 Computation Of Value Of Finished Materials

Cost Of Production --Add Opening Stock Of FG--Less Closing Stock Of FG---Cost Of Goods Sold

Preparation Of Cost Sheet

4 Computation Of Profit 1 Profit As % of Cost( Total Cost Given) Profit=Cost x Profit% 100 2 Profit as a percentage of Selling Price (Total Cost is given) Profit=Cost X Profit% 100-profit% 3 Profit as percentage Of Cost ( Selling Price is given) Profit =Selling Price x Profit % 100+profit%

Preparation Of Cost Sheet

5 Estimation Of Overheads

1 As 2 As 3 As 4 As 5 As

% Of Prime Cost % Of Direct Wages % of Labor Cost % of Administration Cost Cost Of Direct Materials

Preparation Of Cost Sheet

6 Treatment Of Scrap/By ProductReliable Value deducted from FOH 7 Treatment Of Shortage of FG

Normal Shortage added to Cost Of Production

8 Treatment Of Subsidy
To be deducted from profit

Items Excluded From Cost

1 Purely Financial Incomes 2 Purely Financial Charges 3 Appropriation Of Profit 4 Abnormal Expenses

Items Excluded From Cost

Purely Financial Incomes  Interest On Investments

      Interest on Bank Deposits Share Transfer fee Rent Receivable Capital Profit Dividend Received Cash Commission or Discount

Items Excluded From Cost

2 Purely Financial Charges

Capital Losses Damages Payable Penalties and Fines Expenses On Transfer Of Company Office Interest On Bank Loan, Debentures Discount On Bonds etc Losses on investment Cash Discount

Items Excluded From Cost

3 Appropriation Of Profit
Appropriation Of Sinking Fund Dividend Paid Taxes On Income & Profits Charitable Donations Transfer To Reserves

Items Excluded From Cost

4 Abnormal Expenses & Losses

Cost Of Abnormal Wastage of Materials Loss by theft Loss by fire Cost of Abnormal Idle Time Exceptional Bad Debts

Factory Overhead
Operating Supplies- lubricating Oil, detergent, Welding Materials, paints, nuts, bolts, dyes, nondurable tools Repairs & Maintenance-gears, pulleys, belts, washers Labour cost of Set up, Inspection, Rearranging of Machinery & Equipments Unproductive Wages or Indirect Wages Factory Rent Internal Transport, Overhead Crane Factory Rates & Insurance Power & Fuel Salaries of Foremen ,Supervisor ,technical Directors & Staff Wages of gateman, time keeper, factory Clerk, Tool Room Staff store keeper Lighting & Heating Of Factory Depreciation Of PM, Factory building, tools Waste Disposal Training Factory Staff Canteen Drawing Office Cost, Dispensary

Administration Overheads
Rent, Rates & Insurance of Gen Office Lighting Heating Of Office Office Salaries Depreciation of office building, furniture, equipments Bank Charges, Audit Fee, Counting House, Legal Expenses Office Telephone & Postage, Printing & Stationery Superannuation etc

Selling & Distribution Overheads

Salaries, commission, traveling of sales Staff Advertising, Catalogues, price lists Rent & Rates, Maintenance & Insurance of Sales Office, Show Rooms Selling Department Salaries & Stationery Bad Debts, Collection Charges Telephones & Postage for Selling Trade Discount Market Research Carriage Out and transport Normal Wastage of finished Goods Samples Warehousing Expenses Packing, Rent, Rates & Insurance Of Warehouse Dep & Running Cost Of Delivery Vans Wages of Packers ,Van Drivers

Cost Sheet Of Jay Engineering Ltd

For the period Ending 31st March,2004

Particulars
Direct Materials Direct Labour Direct Expenses

Amount in Rs 80,000 40,000 12,000 1,32,000 10,000 1,000 2,000 200 300 1,000 1,200 2,000 2,000 500 1,51,200

Question No 1

Prime Cost Factory Overheads: Indirect Wages Electric Power Depreciation On P&M Oil & Waste Lubricants Consumable Stores Lighting Factory Store Keeper Wages Rent-Factory Gn. Factory Expenses Factory Cost

Cost Sheet Of Jay Engineering Ltd

For the period Ending 31st March,2004

Particulars
Factory Cost C/F Office & Administration OH: Depreciation Of Office Building Directors Fee Postage & Telegraph Lighting-Office Printing & Stationery Telephone Charges Rent-Office Managers Salary Cost Of Production Selling & Distribution OH Bad Debts Carriage Outwards Gn. Selling Expenses Traveling Expenses Cost Of Sales

Amount in Rs
1,51,000 1,000 2,000 500 400 500 800 1,000 3,000 1,60,400 2,000 300 2,000 1,000 1,65,700

Question No 1

COST SHEET
Particulars
Raw Materials Add Carriage Inwards Value Of Materials Consumed Manufacturing Wages Chargeable Expenses PRIME COST Factory Overheads: Depreciation-P &M Oil & Waste Motive Power Lighting & Heating Rent: Factory Gas & Water-factory Repairs-factory Unproductive Wages Stationery Works Managers Salary (60% Of 30000) FACTORY COST

Amount in Rs
2,00,000 1,200

Amount in Rs

Ques No 2

2,01,200 1,80,000 3,800 3,85,000 10,000 500 5,000 800 2,000 1,500 7,200 14,000 1,200 18,000 60,000 4,45,000

COST SHEET
Particulars
Factory Cost C/F OA Overheads Depreciation Salaries Rent Gas & Water Directors Fee Gn. Administration Expenses Stationery Managers Salary (40%0 COST OF PRODUCTION
SD Overheads:
Traveler's Commission Bad Debt Rent-Warehouse Carriage Outwards Discount Allowed Packing Expenses Advertising

Amount in Rs
800 15,000 1,000 600 7,000 5,000 800 12,000
4,000 6,200 1,500 3,200
2,100 2,100

4,45,200

Amount in Rs

Ques No 2

42,200 4,87,400

5,000 COST OF SALES Profit Sales 5,11,500 88,500 6,00,000

Cost Sheet Of A Product

OutPut 17,200units
Total Cost Rs 28,000 63,000 91,500 Per Qtl Cost Rs 1.63 3.69 5.32

Particulars
Raw Materials Process & General Wages Prime Cost

Factory Overheads :

Ques No 3

Fuel Electric Power Repairs Haulage Light & Water Rent Rates and Insurance Depreciation On Machinery Factory Cost O &A Overheads Office Salaries Administration Exp Cost Of Production Total Cost Per Unit=Rs 7.00

6,900 1,340 2.400 1,060 400 2,000 2,500 1,08,400

0.40 0.08 0.14 0.06 0.02 0.11 0.15 6.30

7,000 5,000 1,20,000

0.41 0.29 7.00

Cost Sheet for the Half Year Ended 30th September,2004 Units-25,600 Particulars
Raw Materials Purchased Add Opening Stock Carriage Inward Less Closing Stock 1,32,000 22,000 1,584 1,55,584 24,464 1,31,120 1,10,000 2,41,120 44,000 8,800 5,280 2,99,200 17,600 2,81,000 17,600 2,99,000 35,200 2,64,000

Amount in Rs

Question No 4

a) Value Of Materials Consumed Direct Wages PRIME COST Works Overheads Rent, Taxes, Insurance & Others Cost Of Supervision Opening WIP Less Closing Stock Of WIP b) Cost Of Manufacturing Add Opening Stock Of Finished Goods Less Closing Stock Of Finished Stock Cost Of Production

Cost Sheet for the Half Year Ended 30th September,2004 Units-25,600 Particulars
Cost Of Production C/F Add Selling & Distribution Expenses 24000 tons@ 75 paise per ton C) Cost of Sales d) Net Profit SALES

Amount in Rs
2,64,000 18,000

Question No 4

2,82,000 48,000 3,30,000

Workings 1 Profit Per Ton = 48,000/24000= Rs 2 Per ton 2 Qty Sold= Opening Stock Of finished Goods+ Produced-Cl. Stock Of Finished Goods 1600 tons+25,600-32000=24,000tons