Presentation on theme: "SEMESTER--1. This is a method of calculating cost of production. Generally this method is used in such industries where : The production is continuous,"— Presentation transcript:
This is a method of calculating cost of production. Generally this method is used in such industries where : The production is continuous, The units of output are homogenous, The cost units are physical and natural to the product, and The cost per unit is to be known.
The cost sheet is a document of cost designed to show the total cost and per unit cost of the product in a detailed form.It can be prepared weekly, monthly, quarterly etc. as per the requirement. Examples of industries where this method is used; Coal industry, Textile industry, Brick-making industry, Cement industry etc.
To ascertain the total cost and per unit cost of products after a definite period. To know the proportion of each component in total cost such as prime cost, works cost, cost of production. To make comparative study of costs of any two periods of a product in order to control the cost. To estimate the selling price of the product in order to acquire a desired level of profit. To ascertain the tender price of a work to be done.
We can have knowledge of the total cost and per unit cost of units produced. It helps in determining selling price of the production. It helps to keep control over cost of production through a comparative study of the cost of any two periods. It helps to ascertain the tender price of a work which is to be done in future.