Making Account .com
Cost calculation means not only calculating the total cost of the goods ,it also finding the cost of each department of the company and its cost at each stage of the goods
Only expenses and income related to the company is goods and services should be recorded in the cost account .
The simple cost sheet method can be used for products that end in a process
The process cost method can be used for products that end in multiple process (Milk products )
Each process must cross three stages ,At each of these stages the cost of the goods must be calculate
Calculating the cost of goods at each stage
Raw Material  .  work in progress  .  finished goods  

transport charges  10  .  electric charges  20  .  electric charges  20 
labour charges  60  .  labour charges  90  .  labour charges  100 
Raw Material (unit $200)  1000  .  Cutting Machine Charges  20  .  cutting & fitting expenses  60 
Factory Overhead 40% on Labour  .  Office & Admin Overhead 10% on Work Cost  .  

Factory Supervisor  60  .  OfficeFurnitureDepreciation  20  . 
Factory Insurance  5  .  Salary  70  . 
Factory Electric Charge  15  .  Telephone And Postage  5  . 
Maintenance Charges  20  .  Offices Maintain  10  . 
The direct cost of each stage can be easily calculated but the indirect cost can not be calculated because the indirect cost is the cost of the total department.so Each stage is divided based on the indirect cost percentage % to calculate the cost of the goods
If the cost of each sector cannot be calculated from the total cost it can be calculated based on the percentage
Most of the costs incurred for the factory depend on the direct labour so the factory cost can be calculated on the basis of direct labour
Factory Electric Power ,stationery ,Insurance,It is not easy to figure out how much these types of costs have cost each sector so it is a good calculation method to calculate based on direct labor
you know that management is related to every activity of the company so it is a good practice to calculate the administrative costs from the Gross work cost
fatctory cost: The total direct labour must first be calculated $250 and factory cost $100
calculate (100 *100/250 = 40)
40% of the direct labour is factory cost
administrative cost total direct cost (d labour $250, d exp $130 +d metertrial consumed $800  scrap $ 250) + fector cost $100 = work cost $1030 ,administrative cost $103 (103*100/1030=10)
10% of the gross work cost is administrative cost
Particualr  Purchased Raw Materials  closing Materials  Materials consumed  scrap vaue  Materials cost  direct labour  direct exp  prime cost  Factory Overhead 40% of labour  Factory & work cost  W I P opening  W I P closing  Office & Admin Overhead 10% of work cost  Cost Of Goods Production  unit 

raw material cost (708)  1000  ()200  800  250  550  60  10  620  24  644    64.4  708.4  
WIP cost (30unit.cost..$891) per unit cost $29.7            90  40  130  36  166      16.6  182.6  
finished goods cost            100  80  180  40  220      22  242  
total cost 160 unit $836 per unit cost $5.225  1000  ()200  800  ()250  550  250  130  930  100  1030  ()297  103  836  160 
Calculating the cost of goods at each stages between the stage
The production for a week in the "H" department is 30 and the Direct cost is $ 57 But the output is 25 units and the remaining 5 units are 70% percent complete and the Direct cost is $ 57
Direct costs should also be calculated on a Percentage basis if the actual output is different from the expected output
Expected production is 30 units and direct cost is $ 57 But in reality the output is 25 units and the remaining 5 units are 70% work in progress
Calculating in percentage terms is not an accurate calculation method but it does not cause any error in the calculation
160 units were cut to carry the materials in the second stage to the third stage but only 150 units were fitted and The remaining 10 units are 90 percent complete
If you do not calculate the cost of the goods at each stage you have to calculate from the total cost
If you are calculating the cost of goods at each stage you only need to calculate the cost of the place where the unfinished goods
fectory and admine overhead
particualr  amount 

d material cost  39 
d labour cost  5.7 
d expenses cost  5 
fectory & admin over head  3.5 
total working progrss of 10 unit 90% cost  53.2 
particular  Amount  Amount 

purchased raw materials  1000  
closing raw material  200  
raw material consumed  800  
scrao value  ()250  
direct material  550  
direct expenses  130  
direct labour  250  
prime cost  930  
factory overhead (40% of labour)  100  
(+) opening W I P 
  
() closing 
350 

closing W I P 
(+)297  
closing W I P 90%  (+)53  
factory & work cost  4730  
office & admin overhead (43% of work cost)  103  
cost of goods production  783 
topics