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Materials-Introduction Assignment / Homework Help
Materials-Introduction

Introduction:

    When in respect of a production, expenditure is incurred on different elements of cost, it constitutes cost. Element wise, efficient accounting of all expenditure is an essential requirement. Thus, in comparison to wages accounting & overhead accounting, material accounting is of no less importance.

The following features must be present in stores organization, in order to have efficiency in material accounting:

(1) For the purpose of receipt, storage, issue of materials, safety of materials etc. & for maintaining adequate stores records, there must be an efficient store-keeper who must be responsible for all these jobs.

(2) To prevent wastage or deterioration of stores & finished goods, adequate storage facilities must be there.

(3) To assist the store-keeper there should be adequate stores staff for the under mentioned purposes:

     (a) The stores are placed safely in a systematic & accessible manner;

     (b) On the basis of appropriate documents only the stores are received & issued;

     (c) The purchase requisitions are placed in time;

     (d) From theft, pilferage, deterioration etc. the stores are protected;

     (e) The receipts, issues & balances are recorded;

     (f) The useless stores, shortage, surplus etc. are brought to the notice of the   
        management.

(4) The following instructions must be given to the store-keeper:

     (a) Along with the delivery note & a copy of the buying order, to receive the materials from the suppliers; the quantity & quality of the materials should be checked up with reference to order-quantity & specification; together with the delivery note, the copy of the buying order, if found in order, should be initialed & send to the buying department. However a separate report in details has to be sent to the buying department without delay, along with the copies of the buying order & the delivery note, if the delivery is not in accordance with the order. (Along with the delivery note etc. the materials supplied by the supplier are passed on to the store-keeper by the gate-keeper or receiving department.
Sometimes inspection department checks the quality. Separate departments are there in the big organizations for receiving & for inspection. The materials are to be received & inspected by them & then passed on to the store.)

     (b) Materials are to be placed without delay in the respective racks, bins or containers.

     (c) Materials received & placed in are to be entered in the ‘received column’ of the ‘bin card’ & the balance in the bin card including this quantity received & placed in needs to be strike out.

     (d) In accordance with the valid ‘requisition’ signed by the foreman the materials are required to be issued, in the ‘issued column’ of the bin card entry needs to be made, balance in the bin card needs to be strike out & the requisition required to be forward to the costing department.

     (e) As soon as the stock level as per bin card reaches the ‘ordering (or reordering) level’ as mentioned in the bin card, purchase requisition is required to be sent to the buying department. ‘Purchase requisition’ in respect of a new item is to be placed on the basis of bill of material which is received from production planning department.

     (f) Identification of the material can be made easy by using code which should consist of symbol & numbers. For example, for Oil in general, ‘O’ may be the symbol used where as ‘O5’ may be the symbol used for mustard oil. Numbers with points may be used in case of punch card accounting. For example, oil in general may be indicated by 34 & mustard oil may be indicated by 34.15 & so on.

 The cost clerk gets help by the code system or numerical identification to do their job more quickly.

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