Basics of Cost Accounting - Cost Sheet .
- 1. COST ACCOUNTING Dr. S. Devi Narayani Assistant Professor SRM IST Ramapuram
- 3. Introduction: The term cost refers to the monetary value of expenditures for services, supplies, raw materials, labor, products, equipment, etc. Cost Accounting can be explained as follows :- Cost Accounting is the process of accounting for cost which begins with recording of income and expenditure and ends with the preparation of statistical data. It is the formal mechanism by means of which cost of products or services are ascertained and controlled.
- 4. Cost Accounting: - Cost accounting is defined as “Accounting for costs classification and analysis of expenditure as will enable the total cost of any particular unit of production to be ascertained with reasonable degree of accuracy and at the same time to disclose exactly how such total cost is constituted”.
- 5. ELEMENTS OF COST ACCOUNTING
- 6. OBJECTIVES OF COST ACCOUNTING COST CONTROL COST REDUCTION DETERMINATION OF SELLING PRICE DECISION MAKING ASCERTAINMENT OF PRICE
- 7. COST SHEET A cost sheet is a formal documentation of the fixed, variable, direct, and indirect costs a business incurs from start to finish in its production process. Based on this information, a company can determine the total production cost and fix the price per item for the commodities
- 8. ELEMENTS IN COST SHEET Direct Material Cost. Direct Employee Cost. Direct Expenses. Manufacturing Overheads. Administration Overheads. Selling Overheads. Distribution Overheads.
- 9. Steps in Preparation of Cost Sheet: All the cost are classified into Direct Costs or Indirect Costs. Items of costs are arranged in the order of first, Material then Labour and in the last expenses. All Direct Costs are also termed as Prime Costs. In a Cost Sheet all the items of Prime Cost are recorded first strictly in the order of Material, Labour and Expenses. Then all indirect costs also termed as overheads are recorded.
- 10. Cont., In case of indirect costs the items are broadly categorised into three main groups: Works/Factory Cost: In this case all factory overheads are recorded such as indirect works material, indirect factory labour and indirect factory expenses. All indirect costs related to factory is recorded here. Office and Administration Cost: In this case all administration overheads are recorded such as indirect administration material, indirect administration labour and indirect administration expenses. All indirect costs related to administration is recorded here.
- 11. Cont., Selling and Distribution Cost: In this case all selling and distribution overheads are recorded such as indirect selling and distribution material, indirect selling and distribution labour and indirect selling and distribution expenses. Both selling expenses as well as Distribution expenses are considered together in this case. Finance expenses are not to be considered in the costs sheet. E.g., Interest paid, Bad debts, etc. Non-operating incomes and non-operating expenses are not to be considered in the cost sheet. E.g., Profit or Loss on Sale of Fixed Assets, Fictitious Assets written-off, etc.
- 12. Thank you