How will you prepare cost sheet.explain with example.
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Answer:
Meaning of Cost Sheet:
Cost Sheet is a statement which presents detailed information relating to the various stages of cost. It also shows the total cost of the product manufactured during a particular period of time. Thus, the cost sheet is prepared for a particular period of time monthly, quarterly, yearly etc.
Explanation:
Method of Preparation of Cost Sheet:
Step I = Prime Cost = Direct Material + Direct Labour + Direct Expenses.
ADVERTISEMENTS:
Step II = Works Cost = Prime Cost + Factory/Indirect Expenses.
Step III = Cost of Production = Works Cost + Office and Administration Expenses.
Step IV = Total Cost = Cost of Production + Selling and Distribution Expenses. Profit = Sales – Total Cost.
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