Project on: COSTING

• SUBMITED TO:- PROF. FARAH MADAM• PRESENTED BY:-• HAMZA TAMNE 54• MUBIN KHAN 20• FASIH MULLA 21• JIBRAN BADGUJAR 14• SALMAN KHAN 23• FAHAD SHAIKH 45

MEANING OF COST SHEET

• Cost sheet is a statement of cost. In other words, when costing information are set out in the form of a statement, it is called cost sheet. For determination of total cost of production a statement showing the various elements of cost is prepared. This statement is called as a ‘statement of cost’ or ‘cost sheet’.

ELEMENTS OF COST SHEET

• Cost of production.• Material consumed.• Direct wages.• Direct expenses.• Work overhead.• Administration overhead.• Selling overhead.• Distribution overhead.• Profit.• Sales.

PREPARATION OF COST SHEET• Calculation of Materials Consumed:

Materials Consumed = (Opening stock of raw materials + Purchase of raw material + carriage inward) - (closing stock of raw material).

• Calculation of Prime Cost:

Prime Cost = Materials consumed + direct wages + direct expenses.• Calculation of Factory cost:

Factory Cost = Prime cost + sum of all factory overheads.• Calculation of Cost of Production

Cost of Production = Factory cost + office and administration overheads.

• Calculation of Cost of Sales or Total CostTotal Cost = Cost of production + selling and distribution overheads.

• Calculation of Total SalesTotal Sales = Total cost + net profit.

NEW LIBAS COLLECTION

COMPANY PROFILE

Proprietorship firm Manufacturer and wholeseller.• Manufacturing of ladies design suit and sarara.• Business started in 2001 at Mumbai.• Using premium quality febrics• Offering diverse range of products.• Exporting to retailer around Mumbai city.

• Some of the features of our garments are as follows:• Color fastness• Trendy & classy designs• Skin friendly• Neatly stitched• Soft fabric • Perfect fit• Easy to wash and maintain• Shrinkage free

CUSTOMIZATION• To meet the diverse requirements of our varied clients, we

offer the facility of customization. • We offer customization on the following:• Design and pattern• Fabric combination• Printing techniques• Colors and shades• Stitching design• Embellishment• Accessories• Size

COST SHEET FOR THE MONTH OF JANUARY2014

PARTICULARS AMOUNT

AMOUNT

PARTICULARS RS RSRAW MATERIAL PURCHASED

600000

DIRECT WAGES 20000PRIME COST 620000FACTORY OVERHEADS:Hand work in clothes 120000colouring 40000 160000WORKS COST 780000OFFICE OVERHEADS:Electricity Bill 9000Other Office Overheads

4000 13000

COST OF PRODUCTION

793000

Salesman Salaries 50000Salesman Incentive 5000Packaging 2000 57000TOTAL COST 850000PROFIT 61000SALES 911000

COST SHEET ANALYSIS

• Direct Costs :• Direct materials: To manufacture one unit of cloth the following

RAW MATERIALS are required.• MACHINERY.

• Plane cloth.• Thread.• Stone.

• Direct labor/wages: Direct labor/Wages amounts to Rs. 20000 which is approximately 4% of the PRIME COST. This percentage is low because a good amount of work is automated as a result of which Human resources are diverted to more productive areas such as SALES and MARKETING.

Conti….

• Indirect Costs:• Factory Overheads: The Factory Overheads includes the

handwork of clothes colouring which is 17.56 % of sales.

Conti….

Office and Administration Overheads:Electricity and lightings: It consists of office lighting and air conditioning expenses.

Office and administration overheads is Rs.13000 whish is only 1.42 % of sales whish is very less as compare to factory overheads.

Conti….

• Sales and distribution overheads:- Selling and distribution cost include salesman salaries which is more then workers. Salesman salary is 9% of Prime cost as compare to wages which is 4% of Prime cost.

• Sales Commission :As a part of encouragement for sales people, they are given commission of 10 % of the total salaries if they increase the sales.

Conti….Salary of salesmen :The average salary paid to the sales people is around Rs. 8000 of the total cost of the product.Profit: The Profit arise out of selling of the product is Rs.61000 which is 6.70% of sales.

CONCLUSIONThe company has consistently making profit mainly due to his new design clothes as well as good quality clothes to customers.