Page 97 - CTS - Dress Making - TP - Volume - 1

DRESS MAKING - CITS

EXERCISE 32 : Cost Sheet

Objective

At the end of this exercise you shall be able to
• know about cost sheet
• importance of cost sheet
• analyse samples of cost sheet
• prepare cost sheet.

A cost sheet for fashion design is a comprehensive document that outlines all the expenses associated with
creating and producing a garment. It includes material costs, labor costs, overheads, and other miscellaneous
expenses. This helps designers make informed decisions about pricing strategies and profitability.
A cost sheet depicts the following facts:
1 Total cost and cost per unit for a product.

2 The various elements of cost such as prime cost, factory cost, production cost, cost of goods sold, total cost,
etc.
3 Percentage of every expenditure to the total cost.

4 Compare the cost of any two periods and ascertain the inefficiencies if any.
5 Information to management for cost control
6 Calculate and summarize the total cost of the product.
Importance and objectives of cost sheet

1 For calculating the total cost break-up
A cost sheet shows the break-up of the total cost into different elements, i.e. material, labour, overheads, etc. It
also depicts the total cost and cost per unit of the units produced.

2 For determining the selling price
A cost sheet helps in determining the selling price of a product or of a service. The cost sheet ascertains cost at
each stage of the product and also the total cost of the product, where a margin of profit is added and thus the
selling price is ascertained.
3 It facilitates comparison
It helps in comparing the costs of the product over a period of time. This helps the organisation to investigate the
reasons for increasing costs and also control them on the basis of them.
4 Facilitating managerial decision making
Preparation of cost sheet helps managers at various levels in their decision-making process such as

1 to produce or buy a component,
2 what price of goods to quote in the tender,
3 whether to retain or replace an existing machine,
4 how to reduce costs and maximize profit.
5 identify and make decisions whether they need to continue with the product or not.

5 Preparation of budgets
Organizations can prepare a budget with the help of a cost sheet. We can prepare the budget by using the current
or previous year’s data.

Based on our existing cost sheet, we can make estimates of our costs for the next financial year. It helps to
prepare and make the necessary arrangement of funds for costs of the next financial year.

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