Prime costs are the direct expenses related to production such as labor and raw materials. These elements include Prime Costs, Work Costs, Production Costs, COGS, and Sales Costs.
There are 5 major elements of Cost Sheet. Decisions such as to make changes in product or raw material, deciding prices or to retain/replace an existing machine, etc. Moreover, it helps in taking important decisions by the management. Thus, it is also helpful in controlling the cost of a product it is necessary for every manufacturing unit. This sheet helps you fix the selling price of a product or service. The main objective of the cost sheet is to ascertain the cost of a product. Thus, the reconciliation of cost sheets and financial statements is a must at a regular interval. We use data from the financial statement to prepare a cost sheet. Such a cost sheet is useful in quoting the tender price of a job or a contract. Historical Cost: A Historical Cost sheet includes the actual cost for a past period.Įstimated Cost: A Estimated Cost sheet includes costs before the commencement of production. You can prepare a Cost Sheet is based on Historical Costs and Estimated Costs. In other words, the bifurcation of total cost in the form of a statement refers to a cost sheet. This document helps in ascertaining the selling price of a product. It will classify and analyze the components of the cost of a product. It shows various components of the total cost of a product. A Cost sheet is a periodic accounting document that is prepared to know the outcome and breakup of costs for a particular accounting period.