For the ascertainment of Total Cost of any product, there are so many costs that are incurred to make available the goods for the final consumer. That is also known as Cost Sheet. There are three main Components of Total Cost that are Prime Cost, Work Cost, Production Cost.
It is the first Component of Total Cost. If We state the main components of Prime Cost then that are Direct Material, Direct Wages and Direct Expenses. It comprises of all the direct elements. It is also known as the Flat Cost or the Basic Cost.
Prime Cost= Direct Materials + Direct Wages + Direct Expenses
Work Cost or Factory Cost
Work Cost or Factory Cost includes the Prime Cost with an addition of Factory Overheads. Factory Overheads include all the Indirect Expenses incurred in the factory like Indirect Material, Indirect Wages, Bonus to Workers, Overtime Wages, Leave Wages, Factory Lighting and more.
The Components of Work Cost is –
Work Cost= Prime Cost + Factory Overheads
Production Cost includes the Factory Cost with the addition of Office and Administrative Overheads. Office and Administrative Overheads includes all the Office and Management Expenses that are Office Salary, Director Fee, Office Rent and Rates, Office Stationery and Printing, Audit Charges, Bank Charges and more.
The Components of Total Cost of Production is-
Production Cost= Factory Overheads + Office & Administrative Overheads
Total Cost is ascertained by adding the Selling and Distribution Expenses to the Production Cost. Selling and Distribution Expenses comprises of the Advertising Expenses, Showroom Rent Expenses, Packaging Expenses, Salesman Salary expenses, Carriage Outwards, Travelling Expenses and lot more.
Total Cost= Production Cost + Selling and Distribution Expenses
So, this was about the Various Components of Total Cost in Cost Accounting.
Now We will learn to make the Proforma of the Components of Total Cost which is also known as the Cost Sheet Format. This will help you in better and deep understanding about all the various Components of Prime Cost, Work Cost and Production Cost.
Proforma of the Components of Total Cost
|Particulars||Total Cost (₹)||Cost per unit (₹)|
+ Carriage Inwards
+ Octroi and Custom Duty
- Closing Data
|Cost of Direct Material Consumed|
|Add- Work or Factory Overheads|
|Rent and Rates|
|Coffee and Welfare Expenses|
|Add- Opening Stock of Work in Progress|
|Less- Closing Stock of Work in Progress|
|Less- Sale of Waste|
|Work Cost (2)|
|Add- Office and Administrative Expenses|
|Sundry Office Expenses|
|Subscriptions to Trade Journals|
|Director's Travelling Expenses|
|Repairs of Office Equipment|
|Cost of Production (3)|
|Add- Opening Stock of Finished Goods|
|Less- Closing Stock of Finished Goods|
|Cost of Goods Sold|
|Add- Selling and Distribution Expenses|
|Showroom Rent and Expenses|
|Sales Agent Commission|
|Sales Office Expenses|
|Rent of Sales Office|
|Depreciation of Delivery Van|
|Expenses of Sales Branch|
|Lighting and AC Expenses|
|Sales Printing and Stationary|
|Total Cost (1+2+3)|
|Add- Profit or |
|Selling Price (Sales)|
I hope You have understood about all the Components of Total Cost in Cost Accounting.
Check out our Other Cost Accounting Articles-
Check out Our YouTube Channel. There We Consistently upload the Business Management Videos and If You Like Our Videos, then Also Subscribe Our YouTube Channel.