Methods for Finding of Unit Costing
To find out the unit cost of production, three sys-
tems are mainly, used in cost accounting. These systems are as follows-
1.Cost Sheet
2.Statement of Cost.
3.Production Account.
Cost Sheet
Cost sheet is a tabular type statement of the expenses incurred in the production of a commodity in a particular period of time. The expenses are subdivided in such a way can be known easily.
Characteristics of Cost Sheet
The main characteristics of cost sheet are as follows-
1.This is a statement related to specific time periodsuch as-weekly, monthly, half-yearly, yearly etc.
2.This shows the total cost and the per unit cest of production of the commodity.
3..This is a tabular statement or description, which is not a component of double entry cost accounting.
4.Through this, every stage of cost is presented separately, such as prime cost, factory cost, office cost, total cost etc.
5.Comparison of costs of previous period and present period of production can be done.
6.It is able to present the comparative cost statement of similar goods with different qualities.
7.It also provides information about the change in cost of production as result of change in production.
8.It also helps to find out the profit or loss incurred on production in the given period.
Advantages of Cost Sheet
The main advantages of cost sheet are as follows-
1.The total cost and the per unit cost of production during a given period can be known with the help of cost sheet.
2.The selling price can be determined by adding the desired profit to the total cost shown in the cost sheet.
3.It helps in cost control through comparison of expenses in various periods.
4.Cost sheet helps in estimating the various expenses accurately, and thereby helps in determining correct or proper tender price.
5.The cost results of various periods can be compared easily with the help of cost sheets. Future production policy can be determined on the basis of this and decision making on important issues becomes easy for the managers.
6.If a firm is producing more than one commodity then the cost of production of various commodities can be compared and a proper alternative for every production work can be chosen..
7.During conditions of adjustment and coordination business firms involved in the same commercial activity or business activity can mutually compare the production costs and all the firms, or institutions can benefit from one another by adopting the merits of one another.
