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Unit or Output Costing-I

(Cost Sheet ,Cost Statement and

Production Account)
• Unit or Output costing is used in those
industries or organisations where standard
products are produced from a common
process and all the units produced are more
or less similar to each other.
• This method is also known as “Single Costing
Definition of Unit or Output Costing
“Unit Costing method is a Method of costing
applied to ascertain the cost per unit or
production where standard and identical
products are manufactured.
Walter W.Bigg.
Charachterstics of Unit Production
• Production should be uniform or
• Identical products
• The cost unit should be physical /natural
• Per Unit cost should be determined ,for eg.Per
ton, per metre etc.
Objectives of Unit /Output Costing

• To know the totsl cost of production

• To classify cost under related categories such as prime
cost,works cost etc.
• To determine the effect of each element of cost
• To compare cost during two or more periods
• To determine proposed setting price to earn desired profit
• To Determine tender price on the basis of Cost Data and
Fututre prospects.
Elements of cost under Unit /Output
• Materials
• Labour
• Direct expenses
• Overheads
Methods of determining Unit Cost

1) Cost Sheet
2) Statement of Cost
3) Production Account
Cost Sheet
• Cost sheet is a statement which is used to
determine the total cost of goods produced in
a specific Period and in which total cost,per
unit cost and cost incurred at various stages
from manufacturing a products to the stage of
making it saleable are shown.
Definition of Cost sheet
• “Cost Sheets are prepared for the use of
management and consequently they must
include all the essential details which may
assist the manager in judging the efficiency of
Facts about Cost sheet
• Total Quantity of production
• Total cost of total quantity produced
• Per unit cost of total quantity produced
• Various components of cost at various stages of
Production i.e. Prime cost,factory cost
• Direct and Indirect cost of production
• Comparative cost of two productsand its analysis
• Proportion of each individual cost to total cost
expressed in percentage.
Advantages of Cost sheet
• Determination of selling Price
• Control on Expenses
• Help in Minimising the Expenses
• Comparative study of Cost
• Benefit to common man
Difference between Cost Account and
Cost Sheet
Cost Account Cost Sheet
• Double Entry System • No Double Entry System
• Used in • Used Monthly,weekly
ProductionA/cs,Process A/cs
• Helpful in knowing
• No help in making comparison Comparisons
• No ascertainment of Cost per
• Ascertain Cost per Unit
• Helpful in Reconciliation • No help in Reconciliation
• Based on cost sheet • Cost sheet helps in cost
• Cost Accounts are not helpful control and guidance
in control and Guidance
Types of Cost Sheet
1) Simple Cost Sheet
2) Cost Sheet with Profit
3) Cost Sheet with Statement of Profit
4) Comparative Cost Sheet
1.)Simple Cost Sheet
(for Month---) Units------

Particulars Total Cost (Rs.) Cost Per Unit(Rs.)

Direct Material ---- -----
Direct Wages ----- -----
Direct or Chargeable ----- -----
(A) Prime Cost ------- ------
Work Overhead /Factory ------- ------
------- -------
(B) Works Cost
Office Overhead ------- -------
(C) Cost of Production ------- -------
Selling and Distribution ------- -------
(D) Total Cost ------ -------
2.)Cost Sheet with Profit Cont…
Particulars Total Cost (Rs.) CostPerUnit(Rs.)
Opening stock of Direct Raw Material ----
Add: Purchases during the Year ----
Add : Incidental Expenses(Carriage , Freight,Octroi ,
Custom Duty) ----
Less: Closing Stock of Direct Raw Material -----
Less: Defective Materials Returned
Less: Residue used in other products
Cost of direct raw material consumed
Direct Wages/Labour Charges or Productive Wages
Direct Expenses /Chargeable Expenses
(A) Prime Cost ------- ------
Add: Work Overhead /Factory Overhead ------- ------
Factory Oncost/Un Productive Labour
Indirect Wages/Unproductive Labour
(Fuel,Power,coal,Light & water,Factory
Insurance,Rent of factory,Dep. On Factory
Building/machine Repairs on factory Building
Cost Sheet with Profit cont…
Particulars Total Cost (Rs.) CostPerUnit(Rs.)
Add: Opening Stock of work in progress
Less: Closing Stock of Work in Progress
Add: Additional Overburden on Rectification
Less: Sale of Scrap/Defective etc.

Factory /Works Cost ------- ------

Add:Office and administrative Overheads/Office exp ------- ------
Legal Expenses,Office Expenses,Office salaries,office
Lighting,Adm. Expenses,Printing and stationery,fees
of Directors,telephone &Telegrams,Managing
Director’s Salary(office),Dep.on Office
building/furniture,Repairs to office
Office Cost or cost of Producion ------ ------
Add: opening stock of Finished Goods
Less: Closing Stock of Finished Goods
Cost of Goods Sold ------ ------
Cost Sheet with Profit cont…
Particulars Total Cost (Rs.) CostPerUnit(Rs.)
Add: Selling & Distribution Overheads:
Travelling Expenses
Salesman Commission
Dep.On Delivery Vans
Packing and Distribution Charges
Bad Debts
Upkeep of Delivery Vans
Warehouse Rent,etc.
Cost of Sales ------- ------
Profit( certain % on total cost or sales) ------- ------

Selling Price ------- --------

3.)Cost Sheet with statement of profits
Particulars Total cost (Rs.) Cost per unit ( Rs.)
Direct Material
Direct Wages
Direct or Chargeable Expenses

Prime Cost ------- --------

Factory /Works Overheads:
Factory Expenses
Rent of Factory
Unproductive wages
Factory/Works Cost
Office and Administrative Overheads:
Office Salaries,Office Rent Dep. On Office
Building & EquipmentGeneral Expenses etc.

Cost of Production
Statement of profits
Particulars Total cost (Rs.) Cost per unit (Rs.)

Cost of Production for ---units@rs.---- --------- -------


Selling and distribution overheads: -------- -------

Selling Expenses
Bad Debts
Advertisement etc.

Cost of Sales ------ --------

Profit ------- --------

Sales/Selling Price -------- ---------

4.)Comparative Cost Sheet
Period/Product Period/Product

Total Cost per Particulars Total Cost per

cost(Rs.) unit(Rs.) cost unit (Rs.)
---- ----- Direct Material,Direct Wages,Direct or --------- -------
Chargeable Expenses

(A) Prime Cost

------ Work Expenses:Fuel,Electric Power -------- -------
------ (B) Work Cost ------ --------

------ Office Expenses,Office salaries,office lighting ------- --------

------ (C) Total Cost -------- ---------

` Profit(% on Cost Price or Sales Price)

(D) Selling Price ------ -------

Statement of Cost
• Statement of Cost is a memorandum
statement which is not made according to the
double entry system. It is a statement which is
made for calculating total cost, per unit cost
and budget cost of product. All elements of
cost in statement of cost are taken from
financial accounting's historical records. In
cost sheet per unit cost of each item of
expense is calculated whereas in statement of
Cost it is not done.
Components of Cost
• Prime Cost
• Factory/Works Cost
• Office and administration cost
• Total Cost
Prime Cost
• Prime cost is the main element of cost of any
product.It is also called “Direct cost”, “ First
Cost”, “ Flat Cost”.
• Prime Cost= Direct Material + Direct Wages
+Direct Expenses
Factory Cost
• Factory overheads includes the expenses
which are of indirect nature and are incurred
in factory or production process or in
operating and controlling production activity.
• Factory/Works Cost =Prime Cost + Factory
Office and administration cost

• The expenses which are incurred in operating and

controlling the business are included in Office
and administration cost . Expenses incurred on
effective functioning and maintenance of
business ,policy creation and implementation are
termed as office and administrative expenses.
• Rent,rates and tax of office building,expenses on
Light and Cleaning of office premises etc.
• Cost of Production=Factory cost+Office and
administration cost
Total Cost
• When selling and distribution expenses are
added in cost of production , then cost arrived
is known as Total Cost.
• Expenses of sales office , salary &commision
allowed to sales manager ,travelling expenses
of sales representative,Advertisement,Bad
Debts,Price-List,Samples ,gifts,Discount
allowed to customers etc.