Nishant Kumar (Student) (326 Points)
23 May 2011
Please explain me the treatment of the following items in cost sheet:
Pay for holidays
Drawing office expenses
R & D Expenses
Cost of Removal of Overburden
Counting Expenses
Cost of Rectification of Normal/Abnormal defective Raw Material
CMA Shilpa Shinde
(COST ACCOUNTANT)
(217 Points)
Replied 17 June 2011
dear Nishant,
Cost sheet will be prepared product wise for a specific period (monthly/ yrly)
A)prime cost includes those expenses which are incurred directly for the manufacture of the product.
-Cost of Rectification of Normal defective Raw Material
-Counting Expenses (assummed direct labrs)
B)factory overheads includes those expenses which are indirectly incurred for the manufacture of product
-Drawing office expenses
-Abnormal defective Raw Material
-R & D Expenses
-Cost of Removal of Overburden
C) next comes is administrative overheads which are indirect expenses incurred at factory premises as well as at corporate office level.
generally admin exp at factory level can be treated as factory cost, while for corp. admin exp to be treated as admin overheads.
Pay for holidays( if of copr. staff)
D) and lastly selling and distribution expenses which in related to sales of product.
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