SIGNIFICANCE OF COST SHEET IN

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SIGNIFICANCE OF COST SHEET IN MANUFACTURING SECTOR:

SIGNIFICANCE OF COST SHEET IN MANUFACTURING SECTOR Prepared by: Priyanka Dutta BT-1109 Mayur Deshmukh BT-1107

PowerPoint Presentation:

You are running a factory which manufactures electronic toys. You incur expenses on raw material, labour and other expenses which can be directly attributed to cost and which cannot be directly attributed but are incurred up to their sales. You need to know the composition of cost at different stages. This will help you in the analysis of cost of a product so that same can be used for its proper management

WHAT IS COST SHEET?:

WHAT IS COST SHEET? The various elements/ components of the cost can be presented in the form of a statement, popularly known as “Cost Sheet” ELEMENTS OF COST Material Labour Expenses

Cost Sheet is prepared on the basis of-::

Cost Sheet is prepared on the basis of-: Historical Cost Historical Cost sheet is prepared on the basis of actual cost incurred. A statement of cost prepared after incurring the actual cost is called Historical Cost Estimated Cost Estimated cost sheet is prepared on the basis of estimated cost. The statement prepared before the commencement of production is called estimated cost sheet. Such cost sheet is useful in quoting the tender price of a job or a contract

PowerPoint Presentation:

In case of typical manufacturing type of operation, the activity may consist of conversion of raw material in the form of finished goods with the help of labour and other services and selling the finished goods in the market to earn profit. In order to interpret the term cost correctly and to ascertain the cost with respect to the cost centres , the cost attached with the manufacturing process may be subdivided what is known as Elements Of Cost.

ELEMENTS OF COST:

ELEMENTS OF COST

A PERFORMA COST SHEET:

A PERFORMA COST SHEET Direct Material cost Direct Labour cost Direct Expenses PRIME COST Add: Factory OH Add: Office & Administration OH TOTAL COST Add: Selling & Distribution OH COST OF SALES Add: Profit SALES

Lets move on to the significances-:

Lets move on to the significances- Manufacturer may secure maximum production at a minimum expenses, if he knows what his product is costing him. In dividing the direct labour, time & wages should be recorded as in first place it should be charged to its respective factory, & then to component of that order on which it was expended As by the comparision of different records as same manager would be enable to see where leaks occur, & take steps to reduce cost.

PowerPoint Presentation:

In a certain steel manufacturing plant, the care taken to the account for the scraps of steels is most impressive to anyone interested in cost keeping. In addition each order is charged with exactly the amount of scrap made necessary to produce it & in this way the cost of product is as near corrected as it is possible so far as material side is concerned.

COST ASCERTAINMENT:

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:

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

FACILITATES THE MANAGERIAL DECISIONS:

FACILITATES THE 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.

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THANK YOU

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