Cost Sheet is a document that reflects the cost of the items and services required by a particular project or department for the performance of its business purposes. For example, a departmental cost sheet might include the material costs, labor costs and overhead costs incurred over a given time frame by a department and it, therefore, provides a record of costs that are chargeable to that department. It is prepared to know the outcome and breakup of costs for a particular accounting period. It is used to determine the cost of a cost object, i.e. product, service, or a cost unit.
A cost sheet is a report on which is accumulated all of the costs associated with a product or production job. It is used to compile the margin earned on a product or job and can form the basis for the setting of prices on similar products in the future. A lost sheet is used to compile the margin earned on a product or job and can form the basis for the setting of prices on similar products in the future. It can also be used as the basis for a variety of cost control measures. Despite the name, a cost sheet can be compiled and viewed on a computer screen, as well as being manually developed on paper. The format of a sheet is regularly a standard one that is either manually rolled forward from previous reports, or else set up within the accounting system for automatic display when a report is printed.
The costs listed on the report are usually aggregated into the following categories:
- Direct materials
- Direct labor
- Allocated factory overhead.