cost sheet : A cost sheet is a statement that provides detailed breakdown of the total cost incurred to produce goods. It help in cost analysis, cost control and decision making.

Item not to be included in cost sheet

• Interest received on investment

• Brokerage, Commission and discount received

• Dividend received

• Interest on bank deposits

• Gain on sale of fixed asset

• Penalties and fines

• Interest on debenture

• Loss by fire

• Cost of abnormal idle time

• Loss on sale of fixed assets

• Income tax paid

Classification of cost

(a) on the basis of behaviour : Fixed cost, Variable cost and Semi-variable cost.

(b) on the basis of Nature of expenses : Material cost, Employee cost and expenses.

(c) on the basis of function : Production cost, Administration cost, Selling cost, Distribution cost, Research and Development cost.

(d) on the basis of payment : Implicit cost and explicit cost.

(e) on the basis of traceability to cost object : Direct cost and Indirect cost.

Important formulas for cost sheet

(1) Raw Material consumed = Opening stock of raw material + Raw material purchased during the year - Closing stock of raw material

(2) Prime cost = Direct Material consumed + Direct labor cost + Direct expenses

(3) Factory cost = Prime cost + Factory overhead + Opening work in progress - Closing work in progress

Note : Factory cost is also known as work cost or production cost.

(4) Cost of production = Factory cost + Office & Administrative expenses + Quality control cost + Primary packaging cost

(5) Cost of goods sold = Cost of Production + opening stock of finished good - Closing stock of finished good

(6) Total cost = Cost of goods sold + Selling and distribution overhead

(7) Sales = Total cost + Profit

(8) Quantity sold = Opening stock + Quantity produced - Closing stock

(9) Conversion cost = Direct labor cost + Direct expenses + Factory overhead

(10) If profit is 1/4 of cost then it will 1/5 of sales