Statement of Cost of Production Format

Blank format

Begin with the centred three-line heading (business name, "Statement of Cost of Production", and "for the year ended ..."), then use two RM money columns: an inner column for workings (such as the raw materials build-up and the list of overheads) and an outer column for the main running totals like cost of raw materials used, prime cost and cost of production. Indent the detail items and rule subtotal/total lines at prime cost, at the total after overheads and at the final cost of production.

Parts of the format

Three-line heading

The business name on the first line, "Statement of Cost of Production" on the second, and "for the year ended ..." on the third, because it covers a period rather than a single date.

Cost of raw materials used

Opening raw materials plus purchases and carriage inwards, less closing raw materials, worked out in the inner column before the figure is carried to the outer column.

Prime cost

The total of cost of raw materials used, direct labour and direct expenses; that is, all direct production costs before overheads.

Factory overheads

Indirect production costs such as factory rent, depreciation of machinery, power and supervisor's salary; only factory-related costs are included, not office expenses.

Work in progress adjustment

Opening work in progress is added and closing work in progress is deducted so that only the cost of goods completed during the period is counted.

Cost of production

The double-ruled final line; it represents the cost of goods manufactured and is transferred to the Trading Account.

Two money columns

The inner column shows the workings (raw materials build-up and the list of overheads) while the outer column shows the main running totals leading to the cost of production.

Filled example

Sri Damai Furniture Factory manufactures wooden furniture in Kluang, Johor. For the year ended 31 December 2025 its records show opening raw materials RM12,000, purchases of raw materials RM85,000, carriage inwards RM3,000, closing raw materials RM10,000, direct labour RM45,000, direct expenses RM6,000, factory rent RM18,000, depreciation of plant and machinery RM8,000, power and energy RM7,000, factory supervisor's salary RM15,000, opening work in progress RM5,000 and closing work in progress RM4,000.

Common layout errors

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