Unit or output costing is used when standard products are produced through a common process and units are similar. A cost sheet is prepared to show the detailed cost of total output for a period. It assembles estimated costs for a cost center and helps management fix selling prices, submit tenders, and formulate production policies by providing cost per unit. A cost sheet calculates prime cost as direct materials + direct labor + direct expenses, then adds factory overheads for works cost, office expenses for cost of production, and selling/distribution costs for total cost.

1. Subject:- Cost Accounting
PRESENTATION – 03
B.Com(Hons.) IVth sem

2. INTRODUCTION
• Unit or Output costing is used in those
industries or organizations where
standard products are produced from a
common process and all the units
produced are more or less similar to each
other.
• This method is also known as Single
Costing Method.

3. Methods of determining Unit Cost
1) Cost Sheet
2) Statement of Cost
3) Production Account

4. COST SHEET
• Cost sheet is a document which provides for
the assembly of the estimated detailed cost in
respect of a cost centre or a cost unit. It is a
detailed statement of the elements of cost
arranged in a logical order under different
heads. It is prepared to show the detailed cost
of the total output for a certain period.

5. Importance of Cost Sheet
• Ascertainment of cost
• Controlling costs
• Fixation of selling price
• Submitting of tenders

6. Objects of Preparing a Cost Sheet
(i) It helps the management to fix up the selling price
on the basis of the cost per unit of the product after
charging certain percentage of profit on cost.
(ii) It also helps the management presenting a
comparative study of current cost with the existing
cost per unit.
(iii) It helps the management while formulating suitable
production policy.
(iv) It is very helpful to submit a price quotation for
tenders.
(v) It also helps the management by supplying suitable
information for management control.

7. Method of Preparation of Cost Sheet:
• Step I = Prime Cost = Direct Material + Direct
Labour + Direct Expenses.
• Step II = Works Cost = Prime Cost +
Factory/Indirect Expenses.
• Step III = Cost of Production = Works Cost +
Office and Administration Expenses.
• Step IV = Total Cost = Cost of Production +
Selling and Distribution Expenses. Profit = Sales
– Total Cost.

8. format
• There is no prescribed format of a Cost sheet. It may change from
industry to industry. A specimen format of a Cost Sheet is given as
under:
Particulars Total (Rs.)
A. Materials Consumed :
Purchases ..............
Add : Opening Stock of Raw material ..............
Expenses on Purchases ..............
Less : Closing Stock of Raw Material ..............
Direct Material consumed ..............
B. Direct Labour (Wages) ..............
C. Direct Expenses ..............
D. Prime Cost (A + B + C) ..............

9. Cont….
E. Factory/Works Overheads ..............
Add : Opening Stock of Work-in-Progress ..............
Less : Closing Stock of Work-in-Progress ..............
F. Works/Factory Cost (D + E) ..............
G. Office and administration overheads ..............
H. Total Cost of Production (F + G) ..............
Add : Opening Stock of finished Goods ..............
Cost of Goods available for sale ..............
Less : Closing Stock of finished Goods ..............
I. Cost of production of goods Sold or cost of good sold ..............
J. Selling and Distribution Overheads ..............
K. Total Cost (I + J) = Cost of Sales ..............
L. Profit ..............
M. Sales (K + L) ..............

10. Example-Cost Sheet

11. Solution