Components of Total Cost in Cost Accounting | Cost Sheet Format

Components of Total Cost in Cost Accounting

For the ascertainment of Total Cost of any product, there are so many costs that are incurred to make available the goods for the final consumer. That is also known as Cost Sheet. There are three main Components of Total Cost that are Prime Cost, Work Cost, Production Cost.


Prime Cost

It is the first Component of Total Cost. If We state the main components of Prime Cost then that are Direct Material, Direct Wages and Direct Expenses. It comprises of all the direct elements. It is also known as the Flat Cost or the Basic Cost.

Prime Cost= Direct Materials + Direct Wages + Direct Expenses


Work Cost or Factory Cost

Work Cost or Factory Cost includes the Prime Cost with an addition of Factory Overheads. Factory Overheads include all the Indirect Expenses incurred in the factory like Indirect Material, Indirect Wages, Bonus to Workers, Overtime Wages, Leave Wages, Factory Lighting and more.

The Components of Work Cost is –

Work Cost= Prime Cost + Factory Overheads


Production Cost

Production Cost includes the Factory Cost with the addition of Office and Administrative Overheads. Office and Administrative Overheads includes all the Office and Management Expenses that are Office Salary, Director Fee, Office Rent and Rates, Office Stationery and Printing, Audit Charges, Bank Charges and more.

The Components of Total Cost of Production is-

Production Cost= Factory Overheads + Office & Administrative Overheads


Total Cost

Total Cost is ascertained by adding the Selling and Distribution Expenses to the Production Cost. Selling and Distribution Expenses comprises of the Advertising Expenses, Showroom Rent Expenses, Packaging Expenses, Salesman Salary expenses, Carriage Outwards, Travelling Expenses and lot more.

Total Cost= Production Cost + Selling and Distribution Expenses

So, this was about the Various Components of Total Cost in Cost Accounting.


Now We will learn to make the Proforma of the Components of Total Cost which is also known as the Cost Sheet Format. This will help you in better and deep understanding about all the various Components of Prime Cost, Work Cost and Production Cost.


Proforma of the Components of Total Cost


ParticularsTotal Cost (₹)Cost per unit (₹)
Direct Material
+ Purchase
+ Carriage Inwards
+ Octroi and Custom Duty
- Closing Data
Cost of Direct Material Consumed
Direct Wages
Direct Expenses
Prime Cost(1)
Add- Work or Factory Overheads
Indirect Material
Indirect Wages
Insurance
Factory Lighting
Supervision
Work Stationary
Rent and Rates
Repairs
Coffee and Welfare Expenses
Repairs
Work Salary
Add- Opening Stock of Work in Progress
Less- Closing Stock of Work in Progress
Less- Sale of Waste
Work Cost (2)
Add- Office and Administrative Expenses
Office Salary
Sundry Office Expenses
Subscriptions to Trade Journals
Office Lightings
Establishment Charges
Director's Travelling Expenses
Consultants Fee
Legal Charges
Audit Fees
Bank Charges
Repairs of Office Equipment
Insurance
Cost of Production (3)
Add- Opening Stock of Finished Goods
Less- Closing Stock of Finished Goods
Cost of Goods Sold
Add- Selling and Distribution Expenses
Advertising Expenses
Showroom Rent and Expenses
Salesmen Salary
Packaging Expenses
Carriage Outwards
Sales Agent Commission
Catalogues Cost
Tenders Cost
Warehouse Expenses
Sales Office Expenses
Rent of Sales Office
Depreciation of Delivery Van
Expenses of Sales Branch
Lighting and AC Expenses
Sales Printing and Stationary
Bad Debts
Total Cost (1+2+3)
Add- Profit or
Less Loss
Selling Price (Sales)

I hope You have understood about all the Components of Total Cost in Cost Accounting.

Check out our Other Cost Accounting Articles-

Also Read- Cost Accounting Complete Notes for BBA, B.COM and MBA Students

Installation of Costing System- Meaning, Steps, Difficulties and ways to overcome

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