DIRECT MATERIAL + DIRECT LABOUR + DIRECT EXPENSES = PRIME COST.

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Presentation transcript:

DIRECT MATERIAL + DIRECT LABOUR + DIRECT EXPENSES = PRIME COST

Prime cost + Factory Overheads* = FACTORY COST * Factory Overheads includes factory rent, oil & water, electric power, depreciation, etc.

Factory Cost + Administrative overheads* = COST OF PRODUCTION *Administrative overheads includes office rent, depreciation for office, manager salary, stationery, etc.

Cost of Production + Selling Overheads* = COST OF SALES *Selling Overheads includes salesman salary, advertising, free samples, delivery charges, etc.

Cost of Sales + Profit Margin = SALES

Sales = Direct Materials + Direct Labour + Direct Expense + Factory overheads + Administrative overheads+ selling overheads + profit margin

COST SHEET Particulars Rupees Direct Materials…………………. +Direct Labour…………………. +Direct Expenses…………………. = Prime Cost…………………. + Factory overheads…………………. =Factory Cost…………………. +Administrative overheads…………………. =Cost of Production…………………. +Selling overheads…………………. =Cost of Sales…………………. +Profit margin…………………. =Sales………………….

 TRANSFER TO RESERVES  INCOME TAX  DIVIDEND  DISCOUNT ON SHARES WRITTEN OFF