Faculty Guid :-
Prof. Divyang Joshi
Submitted By :-
Disha Patel 27
Kalpan Patel 28
Section : - C
SUB. :- Cost & Management Accountancy
A cost statement or cost sheet is a
document which provides cost for the
assembly of the detailed cost of cost
object or cost centre.
It is a detailed statement which
indicates the break-up of cost
arrangement in logical manner under
different suitable head.
A cost sheet is a statement which
shows the details regarding the total
cost of a cost object, i.e. for the
company as a whole, for a product or
A cost sheet not only shows the total
cost but also the various component
of the total cost…..
It discloses the various elements of cost
which make up the total cost.
It discloses the cost per unit as well as the
total cost of output.
It facilities for preparation of tender price
or selling price advance.
It comparison of current year’s total cost
with the estimated cost and with the previous
It shows the total cost amount and the cost
per unit of production.
It is helpful for the purpose of cost
It facilities the fixation of the selling price of
It helps in cost control by ascertaining the
actual operational efficiency as compared to
the standard or targeted competitors.
Particulars Total cost
Direct material cost:
opening stock of raw material
Add: purchase of raw material
less: closing stock of material
Cost of raw material consumed:
Direct labour cost
COST OF OPERATING
Add: opening stock of WIP
Less: closing stock of WIP
particulars Total cost
Office & Administration cost
OFFICE COST / COST OF PRODUCTION:
Add: opening stock of finished goods
Less: closing stock of finished goods
COST OF PRODUCTION OF GOODS FOR SALE
Selling & distribution cost
Expenses are part of the cost which are
not of the nature of material and labour but
are incurred due to business activities. In
short, the amount spend for running a
business is termed as expenses.
Direct expenses can be directly linked
with a specific saleable product or service.
The expenses that cannot be identified or
linked or attributed or allocated directly to
the finished saleable product or services are
termed as INDIRECT expenses.
PRODUCTION/ MANUFACTURING EXP:
Production is the process of
converting raw materials into finished
goods through the use of labour,
service & other facilities in factories.
The major elements of
production cost are :
Direct labour cost
Direct material cost
It is the sum of those costs which are
related to the general administration
activities and general management activities
which cannot be directly related to
production, marketing, research &
development, and financing functions of the
The amount of money spent on publicity
and advertising, salesmen’s salaries and wages,
sales executives’ salary, etc...
Cost incurred on delivering products and
other related activities, e.g. to facilitate
movement of goods in the hands of purchaser
or customers are called as distribution
Finance costs are those which are
associated with external borrowed funds, e.g.
interest paid or accrued on capital borrowed.
Research exp. Are those which are
incurred in discovering of new ideas, new facts
new application of accepted facts and
improvement of existing products, process or
Prime cost consists of three important
elements of costs, i.e direct materials cost,
direct labour cost, and direct expenses.
Generally, the prime cost constitutes the
highest percentage of total costs.
FACTORY COST or WORK COST:
It comprises of prime cost and factory
overheads or factory expenses which
include indirect material cost , indirect
labour cost and indirect expenses. Work
cost denotes the expenses that are incurred
in Converting raw material into finished
the sum of direct labour cost, direct
expenses, & manufacturing or factory
expenses is also referred to as a
OFFICE COST OF PRODUCTION:
Office cost is the aggregate of works
cost and office & administration expenses.
TOTAL COST OR COST OF SALES:
When selling & distribution expenses
are added to office cost , it is known as cost
Total cost serves the purpose of
fixing the selling price by adding markup
on total cost or a profit margin on total
sale. The markup indicates a % of profit on
if the word using is ‘margin’, then it
means it is a profit as % of sale price. This
concept is accepted in the global market. By
comparing the total cost of present year
with the previous and/or the budgeted year,
it is possible to analyse the total cost; and
in turn control the cost , if it has gone up.