Concept

Cost Sheet A Cost Sheet or Cost Statement is “a document which provides a detailed cost
information
Cost Heads • Prime Cost
• Cost of Production
• Cost of Goods Sold
• Cost of Sales
Prime Cost Direct Material Cost XXX
Direct Employee/ Labour Cost XXX
Direct Expenses XXX
Prime Cost XXX
--
Direct Opening Stock of Material XXX
Material Cost Add: Purchases/ Additions XXX
Less: Closing Stock of Material XXX
Direct Materials Consumed XXX
Additions means:
• Cost of material
• Freight inwards
• Insurance and other expenditure directly attributable to procurement
• Trade discounts or rebates (to be deducted)
• Duties & Taxes (if input tax credit is not available/ availed) etc.
• Realized Value of material scrapped (to be deducted)
Direct Employee Cost includes
Employee • Wages and salary;
Cost • Allowances and incentives;
• Payment for overtimes;
• Bonus/ ex-gratia;
• Employer’s contribution to welfare funds such as Provident fund and other
similar funds;
• Other benefits (medical, leave with pay, free or subsidised food, leave travel
concession and provisions for retirement benefits) etc.
Direct Expenses which are incurred to manufacture a product or for provision of service
Expenses and can be directly traced in an economically feasible manner to a cost object
• Cost of utilities such as power & fuel, steam etc.;
• Royalty paid/ payable for production or provision of service;
• Hire charges paid for hiring specific equipment;
• Fee for technical assistance and know-how;
• Amortised cost of moulds, patterns, patents etc.;
• Cost for product/ service specific design or drawing;
• Cost of product/ service specific software;
• Other expenses which are directly related with the production of goods or
provision of service.

Show your love by using code CAPRANAV for all Unacademy Subscriptions
 Cost of Prime Cost XXX
Production Add: Factory Overheads XXX
Gross Work Cost XXX
Add: Opening stock of Work-in-process XXX
Less: Closing stock of Work-in-process XXX
Factory / Works Cost XXX
Add: Quality Control Cost XXX
Add: Research and Development Cost XXX
(Process Related)
Add: Administrative Overheads related XXX
with Production
Less: Credit for recoveries (Miscellaneous XXX
Income)
Add: Packing Cost (Primary Packing) XXX
Cost of Production XXX
Factory • Consumable stores and spares;
Overheads • Depreciation of plant and machinery, factory building etc.
• Lease rent of production assets;
• Repair and maintenance of plant and machinery, factory building etc.
• Indirect employees cost related with production activities;
• Drawing and Designing department cost;
• Insurance of plant and machinery, factory building, stock of raw material &
WIP etc.
• Amortized cost of jigs, fixtures, tooling etc.
• Service department cost such as Tool Room, Engineering & Maintenance,
Pollution Control etc.
Cost of Goods Production Cost of units which are sold
Sold Cost of Production XXX
Add: Cost of Opening Stock of Finished Goods XXX
Less: Cost of Closing Stock of Finished Goods XXX
Cost of Goods Sold XXX
--
Cost of Sales Production Cost and all other Cost for units which are sold
Cost of Goods Sold XXX
Add: Administrative Overheads (General) XXX
Add: Selling Overheads XXX
Add: Packing Cost (Secondary) XXX
Add: Distribution Overheads XXX
Add: Interest and Finance Charges XXX
Cost of Sales XXX
--
Cost Sheet Total
Complete Ref Particulars Cost
Format 1.
Opening Stock of Raw Material xxx
Add: Additions/ Purchases xxx

Show your love by using code CAPRANAV for all Unacademy Subscriptions
 Less: Closing Stock of Raw Material (xxx)
Direct Materials Consumed: xxx
2. Direct Employee (Labour) Cost xxx
3. Direct Expenses xxx
4. Prime Cost (1+2+3) xxx
5. Add: Works/ Factory Overheads xxx
6. Gross Works Cost (4+5) xxx
7. Add: Opening Work-in-Process xxx
8. Less: Closing Work-in-Process (xxx)
9. Works/ Factory Cost (6+7-8) xxx
10. Add: Quality Control Cost xxx
11. Add: Research and Development Cost (Process Related) xxx
12. Add: Administrative Overheads related with Production xxx
Less: Credit for recoveries/ scrap/ by-product (Miscellaneous
13. Income) (xxx)
14. Add: Packing Cost (Primary Packing) xxx
15. Cost of Production (9+10+11+12-13+14) xxx
16. Add: Cost of Opening Stock of Finished Goods xxx
17. Less: Cost of Closing Stock of Finished Goods (xxx)
18. Cost of Goods Sold (15+16-17) xxx
19. Add: Administrative Overheads (General) xxx
20. Add: Selling Overheads xxx
21. Add: Packing Cost (Secondary) xxx
22. Add: Distribution Overheads xxx
23. Add: Interest and Finance Charges xxx
24. Cost of Sales (18+19+20+21+22+23) xxx
--
Treatment of • Any abnormal cost, where it is material and quantifiable, shall not form part
Abnormal of cost of production or acquisition or supply of goods or provision of
Items service.
• Examples of abnormal costs are
- Cost pertaining to or arising out of a pandemic e.g. COVID-19
- Cost associated with employees due to sudden lockdown.
General • If question is silent about type of admin overheads, then if it is given as a %
Points of any production related item then it is to be taken as admin overheads
related to production. If no linkage is there, then you can assume any type –
production or general and put note accordingly.
• Column for per unit is only essential if required in question
• Salary paid to Functional Manager – Production Control is to be taken in
Admin Overheads related to Production
• Realizable value of Scrap can be of two types – Material related Scrap and
Processing related Scrap
• Carriage of Return of Material is to be taken in Factory Overheads
• Cost of Rectification of Defective Units should also be taken under Factory
Overheads
• Salary paid to Director (including Technical Director) is part of admin cost

Show your love by using code CAPRANAV for all Unacademy Subscriptions
 • Income Tax, Donation etc. should not be taken in Cost Sheet
• GST on RCM should be added to Cost

PYQ May 2022 | Exhaustive Practice Question

Show your love by using code CAPRANAV for all Unacademy Subscriptions
Show your love by using code CAPRANAV for all Unacademy Subscriptions
PYQ Nov 2019 – Q3b | Reverse Calculation of Material Purchased - Practice

Show your love by using code CAPRANAV for all Unacademy Subscriptions
Show your love by using code CAPRANAV for all Unacademy Subscriptions
Illustration 3 - Page 6.12 | Format Practice

Show your love by using code CAPRANAV for all Unacademy Subscriptions
Show your love by using code CAPRANAV for all Unacademy Subscriptions
Exercise Que 3 – Page 6.22 | Economies of Scale

Show your love by using code CAPRANAV for all Unacademy Subscriptions
Show your love by using code CAPRANAV for all Unacademy Subscriptions
PYQ May 2019 – Q2a | Calculation of Semi Variable Cost

Show your love by using code CAPRANAV for all Unacademy Subscriptions
Show your love by using code CAPRANAV for all Unacademy Subscriptions
RTP May 2022 – Q5 | GST RCM, Manshift etc.

Show your love by using code CAPRANAV for all Unacademy Subscriptions
Show your love by using code CAPRANAV for all Unacademy Subscriptions