How to Use Cost Sheets


Production companies use cost sheets to track resources used to manufacture goods. The type and use of these sheets mostly depends on the costing system used by the company. The two most common methods are job order and process costing. Each report holds the same information, although companies can create their own particular format. Managerial accountants use cost sheets to allocate resource costs to manufactured goods. Accurate costs are important as companies need to know how much they can charge for goods in order to generate sufficient profits.

  • Review the cost sheet. It should contain sections for direct materials, direct labor and manufacturing overhead. A place for the date and/or job number should also be on the form.

  • Fill out the date and job number spots on the cost sheet. Mark any special notes or other data about the job.

  • Write in a brief description, quantity used and cost for used resources on the cost sheet. Only goods used for the specific job need inclusion.

  • Add information for the number of employees, hours worked and hourly cost for all employees working the job.

  • Include any overhead or other costs associated with the job or batch order. For example, hours spent in specific production processes, overhead costs or indirect materials go in this cost sheet section.

  • Turn in completed cost sheet reports to the accounting department. The information is necessary to compute costs for manufactured jobs and/or batch goods.

Tips & Warnings

  • Try different cost sheet formats in order to capture all information accurately from the production system.

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  • "Managerial Accounting: Tools for Business Decision Making"; Jerry Weygandt, et al.; 2010
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