Cost sheet

Element to be ignored while preparing Cost Sheet

(a) Expenses not related to the product. Ex : Donation ,Gift etc. (b) Abnormal Expenses and Losses. Ex : Loss by fire, theft etc. (c ) Fictitious / Intangible Assets written off. Ex : Goodwill W/off, Preliminary exp. W/off etc.

(d) Expenses after Profit. Ex : Income tax etc. (e) Appropriation of Profits. Ex : Dividends, Transfer to G.R. etc (f) Financial Expenses / Losses. Ex : Interest payment, Cash discount, Bad debts etc. (g) Incomes other than Sales and Sale of Scrap. E.g.: Interest received, rent received, Dividend recd.etc.

To find out Qty.Mfg / Qty. SoldParticulars Units

Opening Stock of finished goods xxx Add : Qty.Mfg. (Finished Goods) xxx Less : Closing stock of finished goods xxx Qty.Sold (Finished goods) xxx

Valuation of Opening & Closing stock of finished goods

(a) Closing Stock Finished of Goods :- To be valued at current year’s cost of production per unit.

(b) Opening Stock of Finished goods :- To be valued at previous year’s cost of production per unit.

If previous year cost of production is not given →Assume it to be the same as current years cost of production.

Valuation of finished goods by weighted average methodParticulars Units Total cpu

Cost

Cost of Production 1000 10000 (10)

Add : Opening Stock of finished goods

200 2300

Less : Cl.stk.of finished Goods 10000+2300

1000+200

=10.25

100 1025

Cost of Goods sold 1100 11275 (10.25)

Types of Problems

(1) Simple format based Problems. (2) Problems based on Reverse Working. (3) Problems based on estimated cost

sheet (variable, fixed & Semi variable costs)

(4) Problems where break up of semi variable cost not given.

(5) Problems based on Total Cost Ratios.

1.Simple format based Problems.

(2) Problems based on ReverseWorking

Some basic information missing. E.g : Purchase of raw material

→ Some other extra information given. E.g : Cost of goods sold

Start with the extra information given in the Question.

(3) Problems based on estimated cost sheets.

Prepare Actual Cost Sheet of the previous year. →Give the effects of variable, fixed & semi variable cost in the estimated cost sheet as given below.

(a) Variable cost : Change In Cost Per Unit Column →Give effect of change in price in the per unit column . If no change in the price Maintain the same amt. in the per unit column.

(b) Fixed Cost : Change In Total Cost Column →Give effect of change in price in the Total Cost column .

If no change in the price. Maintain the same amt. in the Total cost column.

(C) Semi Variable Cost :- →Find the break-up of semi variable cost between fixed & variable cost.

→Change in the variable portion →Effect should be given in per unit column.

→Change in the fixed portion →Effect should be given in total cost column.

Bifurcation of Costs into Variable, Fixed & Semi variable

→Direct material →Direct wages Always variable cost →Direct Expenses →Factory Overheads Can be variable or →Office Overheads fixed or even semi variable →Selling Overheads

If specified → Follow the specifications. If not specified →Consider them as Fixed Cost

IMPORTANT POINTS

(1)In case of a semi variable cost → Give break up of fixed & variable portion in previous years actual cost sheet.

(2) Closing stocks of Actual Cost Sheet → Not to be included as opening stock in Estimated Cost Sheet.

(4) Problems where break up of semi variable cost not given .

→Find out the variable cost per unit

Variable Cost = Difference in cost

Per Unit Difference in qty

→ Find out Total variable cost. Variable cost per unit X No.of units → Find out Fixed cost. F.C = Semi Variable cost – Total Variable

cost

(5) Problems based on Total Cost Ratios

Total cost (Consolidated cost) is given &

Cost sheet to be prepared for two or more

than two products.

Formula to Divide the Total Cost between

the various products.

A B Cost Per Unit Ratio X : X X Qty.Mfg. / Sold Ratio X : X Total Cost Ratio X : X

Only for selling expenses qty.sold Ratio should be used.