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Machine hour rate is calculated by dividing the total overheads of machine by the number of effective machine hours worked during a particular period. For this purpose the overheads may be divided into fixed and variable overheads.

Columnar form is most popular. Although cost sheets are prepared as per the requirements of the management, the information to be incorporated in a cost sheet should comprise of cost per unit and the total cost for the current period along with the cost per unit and the total cost of preceding period.

4.7 Distribution costs or Distribution overheads: Distribution Overheads are the costs incurred in handling a product or service from the time it is ready for delivery until it reaches the ultimate consumer. The cost of packing, repacking, labelling, etc.

A cost sheet is also called a statement of cost. A typical cost sheet does not include total sales and profit. If a cost sheet includes sales and profit, it is called a statement of cost and profit.

Method of Preparation of Cost Sheet: Step I = Prime Cost = Direct Material + Direct Labour + Direct Expenses. ADVERTISEMENTS: Step II = Works Cost = Prime Cost + Factory/Indirect Expenses. Step III = Cost of Production = Works Cost + Office and Administration Expenses.

Cost Sheet Example A cost sheet is a report that lists all of the costs connected with a product or manufacturing process. A cost sheet is used to calculate the profit margin on a product or activity and set prices for similar products in the future. It can also be used to support a variety of cost-cutting methods.

Apportionment is the process of dividing the overhead cost among different departments or cost centers on a reasonable and equitable basis. Absorption is the process of charging the total overhead cost to different products or services based on a predetermined rate.

A cost sheet is a statement that shows the various components of total cost for a product and shows previous data for comparison. You can deduce the ideal selling price of a product based on the cost sheet. A cost sheet document can be prepared either by using historical cost or by referring to estimated costs.