Costing Sheet

There are number of costing sheet available. We are concentrating on financial

costing sheet as well as production costing sheet

Financial costing sheet

Product Cost sheet is basic document to introduce the formulation of cost for
product being produced. Product costing sheet smells all individual cost including in
the production irrespective of direct or indirect cost.

Elements of Cost

Mechanism of Cost Build Up

1. Prime cost = Direct Materials + Direct Labour +Direct Expenses

2. Work or Factory cost = Prime cost + Works or Factory Overheads
3. Cost of Production = Works Cost + Administration Overheads
4. Total cost or = Cost of production+ Selling & Cost of sales Distribution
Overheads
DIRECT MATERIAL

Those materials which can be identified in the product and can be conveniently
measured and directly charged to the product.
E.g.: cloth of dress making, bricks for building

The following are normally classified as direct materials:

1. All raw materials
2. Materials specifically purchased for a specific job, process or order
3. Parts or components purchased or produced
4. Primary Packing materials

Note: Direct Material cost comes from Store department.

DIRECT LABOUR

All labour expended in altering the construction, composition, confirmation or

condition of the product.
It is that labour which can be conveniently identified or attributed wholly to a
particular job, product or process or expended in converting raw materials into
finished goods.

Direct labour includes payment made to

1. Labour engaged on the actual production of the product or in carrying out of an
operation or process.
2. Labour engaged in aiding the manufacture by way of supervision, maintenance,
tools setting transportation of material etc.
3. Inspectors, analysts etc., specially required for such production

DIRECT OR CHARGEABLE EXPENSES

All expenditures other than direct material or direct labour that are specifically
incurred for a particular product or process. Such expense is charged directly to the
particular cost centre as part of the prime cost.
Eg: Excise duty, Royalty on production, surveyor’s fees, designing or drawing
expenses etc

Direct Expenses Includes

1. Carriage Inwards
2. Production Royalty
3. Hire Charges of Special Equipment
4. Cost of Special Drawings/Designing
5. Process Cost
Note: Direct Expenses (Process Cost) comes from Activity cost

Manufacturing or Factory overheads

All material, labour and expenses, which cannot be identified as direct costs, are
termed as ‘indirect costs’. The three elements of indirect costs namely indirect
materials, indirect labour and indirect expenses are collectively known as
‘Manufacturing or Factory Overheads’ or ‘On costs”.

Indirect Material Cost

Consumable like lubricating oil, spare parts for machinery are called as indirect
materials. Such commodities do not form part of the finished product.

1. Lubricating Oil
2. Grease
3. Paper/Cloth
4. Quality check chemicals

Indirect Labour Cost

The workers employed for carrying out tasks incidental to production of goods or
those engaged for office work and selling and distribution activities are known as
‘indirect labour’. The reward given to them is called indirect wages.

Indirect Expenses

All expenses other than indirect materials and labour which cannot be directly
attributed to a particular product, job or service are termed as ‘indirect expenses.

Indirect Expenses Includes

1. Rent of Building
2. Repair of Machinery
3. Factory Lighting and Heating
4. Insurance
5. Oil and Water
6. Depreciation of Factory
Administration Cost

Administration cost is incurred for general administration of the organization and for
the operational control.

Administration cost Includes

1. Accounts Office Expenses

2. Legal Charges
3. Audit Charges
4. Office Rent
5. Remuneration to Director
6. Salary to Managers
7. Postage Charges
8. Telephone charges
9. Depreciation of Office
10.Office Lighting

Selling Overheads

Selling Costs are incurred to create and stimulate the demand and to secure the
demand

Selling Overheads includes

1. Sales Man Salaries

2. Commission
3. Advertising and Promotion Charges
4. Samples
5. Travelling Expenses

Distribution Overheads

Distribution Costs are incurred on dispatch of the finished goods to customer

including transportation.

Distribution Overheads Includes

1. Distribution Cost
2. Packaging cost
3. Warehouse cost
4. Carriage Outwards
5. Insurance
 6. Upkeeps of vans
Costing Sheet Architecture: Costing sheet would prepare on the basis of master
record in the master module. The Costing Master will include the entire
add/delete/customize field for individual cost particulars. Costing sheet Master
would also help to categorize the cost particulars.

Master> Costing sheet Customization

Name of Costing Sheet

Name of Cost

Main Category

Sub Category

Submit Reset

• Name of Costing Sheet would be hard coded in the software and will display
as combo box
• Name of Cost should be written by User
• Main Category would be hard coded and would display as combo box
• Sub category would also be hard coded and would display as combo box

*As the cost would be added in the master, would reflect into respective
costing sheet.
Product costing sheet: Product Costing Sheet will display the cost of production
of one batch. Product costing Sheet will include Material cost, Labour cost, and
other expenses incurred during production of one unit.

Product Costing Sheet includes

(A)Raw Material Cost
Direct Material Cost
Indirect Material Cost
Cost of material is being incurred for the production of one unit should
come from Store department.

(B) Labour Cost

Direct Labour
Indirect Labour
Cost of Labour, contributing to production should come from Master

(C)Overheads or Expenses
Direct Expenses
Indirect Expenses
Cost of Direct Expenses should come from Production department
Finance> Cost Sheet>Product Cost sheet

*As per present Design and modify as per above description or after discussion

Product Cost Sheet

(A)Raw Material Cost

Direct Cost

Material Rate Per Unit Quantity Cost Remark

Name

---- ---- --- --- ----

Total

Indirect Cost

Material Rate Per Unit Quantity Cost Remark

Name

---- ---- --- --- ----

Total

(A)Total(Material Cost)

*Same design could be used for other cost particulars.

* All data should be displayed only from various respective sources.

Finance> Cost Sheet>Financial Cost Sheet

Financial costing sheet should be made periodically as per management

requirement. Financial costing sheet must follow below

Financial Cost Sheet for Year________

(A)Prime Cost

Opening of Raw Stock

Material Rate Per Unit Quantity Cost Remark

Name

---- ---- --- --- ----

Total

Factory Overheads

Name Rate Per Unit Quantity Cost Remark

---- ---- --- --- ----

Total

Cost Of Sales

*Above Design shows the part of Financial Costing sheet. Full cost Sheet
should be made as per consultation.

* The following are some important component incorporated in the cost

sheet
* Please follow below structure for Financial cost sheet