Академический Документы
Профессиональный Документы
Культура Документы
CLASSIFICATION OF COST
FIXED COST
SEMI-VARIABLE COST
DIRECT COST
• DIRECT MATERIAL
Some of the items like nails or thread in the store are a part of
finished product. They are not treated as direct materials in view of
negligible cost.
• INDIRECT COST
• INDIRECT MATERIAL
• INDIRECT LABOUR
• INDIRECT EXPENSES
CLASSIFICATION OF OVERHEADS
• FACTORY OVERHEADS
DIVISIONS OF COST
• PRIME COST
• WORKS COST
• COST OF PRODUCTION
• SELLING PRICE
Non-cost items are those items which do not form part of cost of
a product. Such items should not be considered while ascertaining the
cost of a product. These are items included in the Profit & Loss A/c.
These will not come in the cost sheet
a) Income tax
b) Interest on capital
c) Interest on loan
d) Profit on Sale of fixed assets
e) All the assets
f) Donations
g) Capital Expenditure
h) Discount on shares & Debentures
i) Commission to Partners, Managers etc
j) Brokerage
k) Preliminary Expenses Written off.
l) Wealth tax etc
m)Bonus to directors and employees if it is based on profit,
expenses of raising capital, penalties & fines.
Cost sheets helps in identifying the total cost stage wise & any
unwanted cost can be curtailed.
• PREPARE BUDGETS
• PROFIT PLANNING
PARTICULARS TOTAL
COST Rs.
XXX
Add: Office and Administration
Overheads: XXX
Office Salaries
Directors Fees XXX
Office Rents And Rates
Office Stationary and Printing XXX
Sundry Office Expenses
Depreciation on Office Furniture XXX
Subscription to Trade Journals
Office Lightings XXX
Establishment Charges
Directors Traveling Expenses XXX
Consultants Fees
Contribution to Provident Fund XXX
Postage
Legal Charges XXX
Audit Fees
Bank Charges XXX
Depreciation And Repairs of Office
Equipments XXX
Bonus to Staff
XXX
COST OF PRODUCTION
Add :Opening Stock of Finished Goods XXX
Less: Closing Stock of Finished Goods
XXX
COST OF GOODS SOLD
XXX
Add: Selling and Distribution Overheads
Advertising XXX
Show Room Expenses
Salesman’s Salaries and Expenses
Packing Expenses XXX
Carriage Outward XXX
Commission of Sales Agents XXX
Cost of Catalogues XXX
Expenses of Delivery Vans XXX
Collection Charges XXX
Traveling Expenses XXX
Cost Tenders XXX
Warehouse Expenses XXX
Cost of Mailing Literature XXX
Sales Manager’s Salaries XXX
Insurance of Showroom XXX
Sales Director’s Fees XXX
Sales Office Expenses XXX
Rent of Sales Office XXX
Depreciation of Delivery Vans XXX
Expenses of Sales Branch XXX
Establishments XXX
Branch Office Expenses XXX
SALES XXX
ESTIMATION OF COST
• FIXED COST
• VARIABLE COST
• SEMI-VARIABLE COST
The accounts of Z ltd for the yr ended 31st Dec 2004, shows the
following:
Rs.
Work office salaries 6500
Administrative office salaries 12600
Cash Discounts Allowed 2900
Carriage Outward 4300
Carriage Inward 7150
Bad Debts Written Off 6500
Repairs to Plant & Machinery 4450
Rents, Rates, Taxes, Insurance etc
Factory 8500
Office 2000
Sales 461000
Stock of Raw Materials
1st Jan, 04 48000
31 Jan, 04
st
62000
Materials Purchased 185000
Traveling Expenses 2100
Travelers Salaries and Commission 7700
Productive Wages 126000
Depreciation on Plant & Machinery 6500
Depreciation on Office Furniture 300
Directors Fees 6000
Gas & Water (Factory) 1200
Gas & Water (Office) 400
Managers salary (1/4 office & ¾ Factory) 10000
General Expenses 3400
You are required to prepare a cost statement for the year ended 31st
Dec 04
Solution:
Z Ltd
Cost Statement for the yr ended 31st Dec 2004
Particulars Rs. Rs.
Raw Materials Consumed:
Stock of Raw materials as on 1st Jan 04 48,000
(+) Materials Purchased 1,85,000
(+) Carriage Inward 7,150
(-) Stock of Raw Materials as on 31st Dec 04 62,800
Raw Materials Consumed 1,77,350
Productive Wages 1,26,000
Prime Cost 3,03,350
Cost of
Production XXX XXX XXX XXX
Selling &
distribution
Overheads XXX XXX XXX XXX
Cost of Sales XXX XXX XXX XXX
Profit XXX XXX XXX XXX
Sales XXX XXX XXX
SOLVED EXAMPLE OF ESTIMATED COST SHEET
Swadeshi Electronics Ltd. furnishes you the following information for
the year ended 31st March 06
Prepare a statement of cost for both the yrs ending 31st March 06
and 31st March 07 showing maximum possible details of cost
Solution:
Swadeshi Electronics Ltd
Cost Sheet for the yr ended 31st Mar 06 & 31st March 07
15000 20000
Total Per Unit Total Per Unit
Cost Cost
Direct Materials 330000 22 396000 19.8
Direct Wages 270000 18 288000 14.4
Cost of
Production 930000 62 1032000 51.6
Sales Overheads 90000 06 120000 06