Costing is the technique of ascertaining cost.

A cost sheet is a statement of cost prepared at given

interval of time showing various elements of cost of a product produced, or service rendered during
a particular period.

This statement gives details about total cost and cost per unit at different stages of production.
Important components of cost are:

a) Prime Cost = Direct material cost + Direct labour cost

b) Works Cost = Prime cost + Factory overheads.

c) Cost of production = Works cost + Office & Administrative overheads.

d) Total Cost (Cost of sales) = Cost of production + Selling & Distribution overheads.

As the company has variant products, the selling price per unit cannot be estimated. So all the
calculation of sales has been limited to sales in rupees.

PARTICULARS 31-3-2018 (in 31-3-2017 (in crores)

crores)
Raw Materials Consumed 15008.88 15594.36

Direct Wages (Labour) 2487.46 2444.31

PRIME COST 17496.34 18038.67

ADD: Factory Overheads

Power 620.92 550.32

Insurance 54.3 55.25

factory rent 314.8 308.68

Other factory overheads 1047.38 994.32

Depreciation and Amortization Expenses 1145.37 1038.04

WORKS COST INCURRED 20679.11 20985.28

 ADD: Opening Stock of WIP 3491.33 2388.42

LESS: Closing Stock of WIP 5016.85 3491.33

WORKS COST 19153.59 19882.37

ADD: Administration Overheads:

Audit Fees 2.95 2.65

Bank Charges 22.95 22.38
Other Office Expenses 1147.95 1004.91

COST OF PRODUCTION 20327.44 20912.31

ADD: Selling and Distribution Overheads:

Advertising expense 886.23 792.44

Warehousing charges 134.87 116.9

Sales man commission 26.76 38.69

Freight and forwarding Expenses 904.00 856.00

Sales Tax 209.6 556.89

Bad Debts 25.14 30.74

Other selling& administrative expense 3185 3310.27

COST OF SALES 25699.28 26602.14
PROFIT 16851.7 15502.96
SALES 42550.98 41105.1

ANALYSIS OF COST SHEET

 Freight and forwarding charges form about 16.82% of selling and distribution overhead.
 Advertisement expense constitutes about 18.589% i.e the company focuses more on
advertisements.
 Direct material constitutes 85.7% of the prime cost while Direct labour constitutes only
14.3% .
 The factory overhead consists mainly of power and fuel which is 19.49%. and followed by
factory rent which is 9.87%.
 Depreciation forms the major part of the factory overhead which is 36.02%. Profit margin is
39.60 % of net sales.
 We can see that in 2018 the cost of production has been reduced thereby leading to an
increase in profit. If we were to look at gross sales in 2017 there was higher sales, but
because of the high excise duty the net sales of 2018 was higher
 There is also less raw material consumption in 2018 which shows that the company was able
to utilize the raw materials more effectively