Federated learning (FL) has emerged as a promising paradigm for privacy-preserving distributed machine learning, but faces challenges with heterogeneous data distributions across clients. This paper introduces FedSat, a novel FL approach designed to tackle various forms of data heterogeneity simultaneously. FedSat employs a cost-sensitive loss function and a prioritized class-based weighted aggregation scheme to address label skewness, missing classes, and quantity skewness across clients. While the proposed cost-sensitive loss function enhances model performance on minority classes, the prioritized class-based weighted aggregation scheme ensures client contributions are weighted based on both statistical significance and performance on critical classes. Extensive experiments across diverse data-heterogeneity settings demonstrate that FedSat significantly outperforms state-of-the-art baselines, with an average improvement of 1.8% over the second-best method and 19.87% over the weakest-performing baseline. The approach also demonstrates faster convergence compared to existing methods. EDERATED Learning (FL) [1] has emerged as a promising paradigm for training machine learning models across decentralized edge devices, enabling privacy-preserving and efficient model updates without the need to centralize sensitive data. However, the effectiveness of FL is often challenged by various factors, including non-independent and identically distributed (non-IID) datasets, varying network conditions, and heterogeneous devices among clients.