Cost Sheet or Statement of Cost

A Cost Statement or Cost Sheet is "a document which provides for the assembly of the detailed Cost of a Cost Center or Cost Unit". It is a detailed statement depicting the subdivision of cost arranged in a logical order under different heads.

The main advantages of a Cost Sheet are as follows:

1. It provides the total cost figure as well as cost per unit of production..
2. It helps in cost comparison.
3. It facilitates the preparation of cost estimates required for submitting tenders.
4. It provides sufficient help in arriving at the figure of selling price.
5. It facilitates cost control by disclosing operational efficiency.

Specimen of Cost Sheet or Statement of Cost

Treatment of stock of raw materials, work-In-progress and finished goods while preparing a Cost Sheet

Stock of raw material: If the figures of opening stock of raw materials, purchases of raw materials and closing stock of raw materials are given, then the figure of raw material consumed (direct material) can be calculated as below:

Work-in-Progress: Work-in-progress represents those units on which some work has been done but which are not yet complete. It is valued at works cost or prime cost basis, but the former is preferred when work-in-progress is valued at works or factory cost then opening and closing stock will be adjusted as below:

Finished goods: When the opening arid closing figures of finished goods are given, the same may be adjusted before calculating cost of goods sold as under:

What is a Cost Sheet? How it is prepared?