importance of cost sheet

Importance of Cost Sheet The importance of cost sheet is as follows:
Cost ascertainment The main objective of the cost sheet is to ascertain the cost of a product. Cost sheet helps in ascertainment of cost for the purpose of determining cost after they are incurred. It also helps to ascertain the actual cost or estimated cost of a Job.
Fixation of selling price To fix the selling price of a product or service, it is essential to prepare the cost sheet. It helps in fixing selling price of a product or service by providing detailed information of the cost.
Help in cost control For controlling the cost of a product it is necessary for every manufacturing unit to prepare a cost sheet. Estimated cost sheet helps in the control of material cost, labour cost and overheads cost at every point of production.
Facilitates managerial decisions It helps in taking important decisions by the management such as: whether to produce or buy a component, what prices of goods are to be quoted in the tender, whether to retain or replace an existing machine etc.

From the following information, prepare a cost sheet for period ended on 31st March 2019. Rs. Opening stock of raw material 12,500 Purchases of raw material 1,36,000 Closing stock of raw material 8,500 Direct wages 54,000 Direct expenses 12,000 Factory overheads 100% of direct wages Office and administrative overheads 20% of works cost Selling and distribution overheads 26,000 Cost of opening stock of finished goods 12,000 Cost of Closing stock of finished goods 15,000 Profit on cost 20%

The following information is given to you from which you are required to prepare Cost Sheet for the period ended on 31st march 2019:
Consumable material: Rs. Opening stock 20,000 Purchases 1,22,000 Closing stock 10,000 Direct wages 36,000 Direct Expenses 24,000 Factory overheads 50 % of direct wages Office and administration overheads 20% of works cost Selling and distribution expenses Rs.3 per unit sold Units of finished goods In hand at the beginning of the period (Value Rs. 12500) 500 Units produced during the period 12,000 In hand at the end of the period 1,500 Find out the selling price per unit if 20% profit on selling price. There is no work-in-progress either at the beginning or at the end of the period.

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