COST SHEET-FORMAT

Subject Faculty
Prof.Rahul Ghosale
B.Com, MBA(Fin), NET(Mgt), GDC&A, Ph.D(Pursuing)

Prime Cost
It consists of direct material, direct wages

and direct expenses.

In other words Prime cost represents the
aggregate of cost of material consumed,
productive wages, and direct expenses.
It is also known as basic, first, flat or direct
cost of a product.
Prime Cost = Direct material + Direct
Wages +
Direct expenses

Direct material
means cost of raw material used or
consumed in production.
Material purchased
+ Opening stock of material
Closing stock of material.
_________________________
Material Consumed_______

 Direct Wages

Direct wages are the wages which can be conveniently

identified with or allocated to cost centers and cost units.
Direct Expenses
Besides direct material and direct layout, certain
expenses may be wholly and exclusively necessary for a
particular production.
Direct material
Direct labor
Direct expenses

together constitute prime cost

Indirect material
Indirect labor
Overhead
Indirect expenses

Factory Overhead
Administrative
Overhead
Selling and Distribution Overhead

Add-Factory or Works Overhead -Factory or works overhead refers

to all indirect expenses of a factory. It includes the following:
Wages of all factory staff excluding those of direct workers
Indirect material
Rent
Rates
Taxes of factory
Depreciation of factory assets
Excise duty
Canteen expenses
Labor welfare expenses

Add: Opening work in process

Less: sales of scraps
Less: closing work in process

Factory cost or works cost

Add-Administration Overhead-It refers to all the

expenses incurred in connection with general
administration.In administrative building, following
things are included:
Salary of administrative staff
Rent
Rates
Taxes of administrative accommodation
Postage
Telegram and telephone
Stationery
Lighting of administrative building
Cost of production
Add: Opening finished stock
Less: closing finished stock
Cost of production of goods sold

Add-Selling and Distribution overhead -refers to

all expenses incurred in connection with sales and
distribution.
Salary of sales staff
Travelers commission
Advertisement
Rent
Rates
Taxes of sales office
Depreciation of sales office appliances
Cost of participation in industrial fares and exhibitions
Cost of free gifts
Cost of free after sales service
Normal bad debt

 Delivery van expenses

Fright and insurance
Packing for delivery loading and unloading
Salary of the deliverymen
Customs duty
Total cost or cost of sales
Add-Profit
Selling Price

Expenses Excluded from Cost

Sheet
All capital expenditure will not include in cost accounting
when we calculate total cost of product. Following are the
main examples of expenses which will be excluded from cost.
Income tax and advance tax
Dividend paid
Discount on issue of shares and debentures
Underwriting commission payment
Capital losses
Expenses for purchasing offixedassets
Loss on the sale offixedasset
Interest on capital
Abnormalloss of material
Over depreciation
Investment of profit