A cost statement template is a financial document which is used to provide the management all the details about the cost of conducting a project. Running any department of the organization or manufacturing different products for goods and services. Basically, a cost statement is used to track all the spending that is happening during the project or any day-to day operations in the organization or business. In a cost statement, all the cost incurred is written whether it’s direct expenses or indirect. There are many reasons for which such statements are prepared. Such as for attending any university of your choice or for any project; but it is mostly used for calculating the cost of goods. All together, a cost statement is the largest expense as it includes all the expenses that occurred for the reason that the statement is prepared for. It also includes the cost that the organization pays to any retailers or wholesalers during the same period.
How to Prepare a Cost Statement?
We can say that the process of making a cost statement is a little complicated and can sometimes mix up the calculations. Therefore, it is very important to do all steps properly and recheck everything.
1- You should start your calculations by adding the opening balance of the stock of the materials that are direct, purchases made during the accounting period also any other purchase expenses made. From the total amount of that next you should subtract the closing balance of stock of direct materials. You will get the amount that is the total of direct materials used.
2- Next step is to add all the salaries that are paid to the labors and if there are any direct charges made of direct materials used. This will be your prime cost. Put together all overheads of the factory which will be rent, indirect labor, indirectly bought materials, insurance, taxes, depreciation, and utilities.
3- Then sum up prime cost, factory overheads, and the opening balance that you had at the beginning of your accounting period. Then from this amount you should subtract the closing balance of the work-in progress. All these steps will give you the amount spent on manufacturing.
4- After this you should add the balance of opening stock of the finished inventory to the amount you just found out that is spent on manufacturing of the products. This will give you the cost of goods available for sale. Now subtract the closing balance of the finished inventory, which you will know at the end of the accounting period, from the cost of goods that are available for sale. Now you have the cost of the goods that are sold.
5- The last step is to list selling and overhead distribution, such as any salary, travel expenses, and advertisement. Now add this cost with the cost of goods sold. This will finally give the amount of total cost at the end of your cost statement.
It is also important to keep in mind that a cost statement shouldn’t include expenses that aren’t related to the project or the product, such as any donations made, any loss by fire. Also, expenses made after profit should also not be included in this statement.
Cost Statement Template
