Components of cost sheet.pptx

components of cost

1. Cost Sheet

2. Components of Cost Prime Cost Factory/Works Cost Office and administration cost Total Cost

3. Prime Cost Prime cost is the main element of cost of any product.It is also called “Direct cost”, “ First Cost”, “ Flat Cost”. Prime Cost= Direct Material + Direct Wages + Direct Expenses

4. Office and administration cost The expenses which are incurred in operating and controlling the business are included in Office & administration cost . Expenses incurred on effective functioning and maintenance of business , policy creation and implementation are termed as office and administrative expenses. Rent, rates and tax of office building,expenses on Light and Cleaning of office premises etc. Cost of Production= Factory cost + Office and administration cost

5. Total Cost When selling and distribution expenses are added in cost of production , then cost arrived is known as Total Cost. Expenses of sales office , salary & commision allowed to sales manager , travelling expenses of sales representative, Advertisement, Bad Debts, Price-List, Samples , gifts, Discount allowed to customers etc.

6. Statement of Cost Statement of Cost is a memorandum statement which is not made according to the double entry system . It is a statement which is made for calculating total cost, per unit cost and budget cost of product . All elements of cost in statement of cost are taken from financial accounting's historical records. In cost sheet per unit cost of each item of expense is calculated whereas in statement of c ost it is not done.

7. Difference between Cost Account and Cost Sheet Cost Account Cost Sheet Double Entry System Used in Production A/ cs , Process A/cs No help in making comparison No t ascertai ned Helpful in Reconciliation Cost Accounts are not helpful in control and Guidance Based on cost sheet No Double Entry System Used Monthly , weekly Helpful in mak ing Comparisons Ascertain c ost per Unit No help in Reconciliation H elps in cost control and guidance