{"id":2775,"date":"2019-11-24T17:41:36","date_gmt":"2019-11-24T17:41:36","guid":{"rendered":"https:\/\/commerceiets.com\/?p=2775"},"modified":"2019-11-24T17:41:36","modified_gmt":"2019-11-24T17:41:36","slug":"material-control-in-cost-accounting-pdf","status":"publish","type":"post","link":"https:\/\/commerceiets.com\/material-control-in-cost-accounting-pdf\/","title":{"rendered":"MATERIAL CONTROL IN COST ACCOUNTING PDF"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/commerceiets.com\/material-control-in-cost-accounting-pdf\/#MATERIAL_CONTROL_IN_COST_ACCOUNTING_PDF\" title=\"MATERIAL CONTROL IN COST ACCOUNTING PDF\">MATERIAL CONTROL IN COST ACCOUNTING PDF<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/commerceiets.com\/material-control-in-cost-accounting-pdf\/#NEED_NECESSITY_OBJECTIVES_OF_MATERIAL_CONTROL\" title=\"NEED\/ NECESSITY\/ OBJECTIVES\nOF MATERIAL CONTROL\">NEED\/ NECESSITY\/ OBJECTIVES\nOF MATERIAL CONTROL<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/commerceiets.com\/material-control-in-cost-accounting-pdf\/#TECHNIQUES_OF_MATERIAL_CONTROL\" title=\"TECHNIQUES OF MATERIAL CONTROL\">TECHNIQUES OF MATERIAL CONTROL<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/commerceiets.com\/material-control-in-cost-accounting-pdf\/#1MATERIAL_LEVELS\" title=\"1.MATERIAL LEVELS\">1.MATERIAL LEVELS<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/commerceiets.com\/material-control-in-cost-accounting-pdf\/#2ECONOMIC_ORDER_QUANTITY\" title=\"2.ECONOMIC ORDER QUANTITY\">2.ECONOMIC ORDER QUANTITY<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/commerceiets.com\/material-control-in-cost-accounting-pdf\/#3PERPETUAL_INVENTORY_SYSTEM\" title=\"3.PERPETUAL INVENTORY SYSTEM\">3.PERPETUAL INVENTORY SYSTEM<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/commerceiets.com\/material-control-in-cost-accounting-pdf\/#4ABC_ANALYSIS\" title=\"4.ABC ANALYSIS\">4.ABC ANALYSIS<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/commerceiets.com\/material-control-in-cost-accounting-pdf\/#5VED_ANALYSIS\" title=\"5.VED ANALYSIS\">5.VED ANALYSIS<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/commerceiets.com\/material-control-in-cost-accounting-pdf\/#6MATERIALS_TURNOVER\" title=\"6.MATERIALS TURNOVER\">6.MATERIALS TURNOVER<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"has-text-align-center wp-block-heading\" id=\"material-control-in-cost-accounting-pdf\"><span class=\"ez-toc-section\" id=\"MATERIAL_CONTROL_IN_COST_ACCOUNTING_PDF\"><\/span><strong>MATERIAL CONTROL IN COST ACCOUNTING PDF<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">Material control is a system which ensures the provision of\nthe required quantity of materials of the required quality at the required time\nwith the minimum amount of capital investment. It can be defined as\nsafeguarding of company\u2019s property in the form of inventory and maintaining it\nat the optimum level, considering the operating requirements and financial\nresources of the business.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">Material control is facilitated through maintaining periodical\nreports and records relating to purchasing, receiving, inspecting and issuing\nof direct and indirect materials.<\/p>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\" id=\"need-necessity-objectives-of-material-control\"><span class=\"ez-toc-section\" id=\"NEED_NECESSITY_OBJECTIVES_OF_MATERIAL_CONTROL\"><\/span><strong>NEED\/ NECESSITY\/ OBJECTIVES\nOF MATERIAL CONTROL<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">The main objectives of material control are as follows:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"960\" height=\"720\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/Slide3-1.jpg\" alt=\"NEED\/ NECESSITY\/ OBJECTIVES OF MATERIAL CONTROL\n\" class=\"wp-image-2779\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/Slide3-1.jpg 960w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/Slide3-1-300x225.jpg 300w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/Slide3-1-768x576.jpg 768w\" sizes=\"(max-width: 960px) 100vw, 960px\" \/><figcaption>Material Control in Cost Accounting PDF<\/figcaption><\/figure>\n\n\n\n<p class=\"has-medium-font-size\"><strong>1.ENSURING UN-INTERRUPTED PRODUCTION<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">The main objective of the material control is to ensure the\nun-interrupted supply of materials for smooth flow of production. Material\ncontrol helps in making available the right type of materials at right time.\nFor this purpose, various material levels are set up such as:<\/p>\n\n\n\n<ul><li>Maximum\nlevel<\/li><li>Minimum\nlevel<\/li><li>Re-order\nlevel<\/li><li>Danger\nlevel, etc.<\/li><\/ul>\n\n\n\n<p class=\"has-medium-font-size\">The setting up the materials levels and following them\nensures the availability of materials at all the time and non-stoppage of\nproduction process.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">2.<strong>PROVISION OF REQUIRED QUALITY OF MATERIALS<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">Material control is also associated with acquiring the\nquality material for production process. The material control department\nensures the supply of quality material from the supplier which is to be used in\nthe production process. As if the quality of material is not proper, it will\nultimately affect the goodwill of the concern.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">3.<strong>MINIMISATION OF WASTAGES AND LOSSES OF MATERIALS<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">Materials constitute the major source of cost to the\nenterprise.&nbsp; Material control system is\nbeing installed in the enterprise to ensure its minimal loss and wastages. For\nthis purpose, various techniques are used such as:<\/p>\n\n\n\n<ul><li>ABC\nanalysis (Always Better Control)<\/li><li>VED\nanalysis (Vital Essential Desirable)<\/li><\/ul>\n\n\n\n<p class=\"has-medium-font-size\">ABC analysis is used to classify the materials on the basis\nof its importance and then applying the required degree of control.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">VED analysis categorize all the material of the business\nconcern into three categories i.e. vital, essential and desirable and on the\nbasis of this, the control is exercised on materials. <\/p>\n\n\n\n<p class=\"has-medium-font-size\">The minimization of losses and wastages of materials ultimately leads to <a href=\"https:\/\/commerceiets.com\/types-of-cost\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"cost (opens in a new tab)\">cost<\/a> reduction and cost control.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>4.CONTROL INVESTMENT IN STOCK OF MATERIALS<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">Material control system ensures no under-investment or\nover-investment in stock keeping. The main aim is to make available only that\namount of raw materials which are needed. There should be no holding of idle\nstock. This may lead to lock up of large amount of capital. Efficient material\ncontrol system aims at keeping the optimum level of stock at all the times.\nThis may be done by using the techniques like:<\/p>\n\n\n\n<ul><li>Economic\nOrder Quantity<\/li><li>Material\nLevels<\/li><li>Perpetual\nInventory System<\/li><\/ul>\n\n\n\n<p class=\"has-medium-font-size\">5.<strong>AIMS AT FIXING THE RESPONSIBILITY<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">In a materials control system, the personnel is required to\nperform the duties of keeping the records regarding materials receipt, issue,\ninspection etc. the material control system aims at fixing the responsibility\nof operating units and individuals connected with the handling of the\nmaterials.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">6.<strong>TO KEEP THE RECORDS<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">Material control system ensures the proper record keeping of\nthe materials purchased, stored, issued and received. This can be made possible\nby adopting the perpetual inventory system. For keeping the records, following\nsystems are used:<\/p>\n\n\n\n<ul><li>Bin\nCard<\/li><li>Stores\nLedger<\/li><\/ul>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\" id=\"techniques-of-material-control\"><span class=\"ez-toc-section\" id=\"TECHNIQUES_OF_MATERIAL_CONTROL\"><\/span><strong>TECHNIQUES OF MATERIAL CONTROL<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">The following are the main techniques of material control:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"960\" height=\"720\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/Slide11-1.jpg\" alt=\"TECHNIQUES OF MATERIAL CONTROL\" class=\"wp-image-2780\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/Slide11-1.jpg 960w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/Slide11-1-300x225.jpg 300w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/Slide11-1-768x576.jpg 768w\" sizes=\"(max-width: 960px) 100vw, 960px\" \/><figcaption>Material Control in Cost Accounting PDF<\/figcaption><\/figure>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"1-material-levels\"><span class=\"ez-toc-section\" id=\"1MATERIAL_LEVELS\"><\/span><strong>1.MATERIAL LEVELS<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"has-medium-font-size\">This technique is applied to maintain the various levels of\nstock to ensure that there is neither over-stocking nor under-stocking of\nmaterials. The various levels are set by taking into consideration the\nfollowing points:<\/p>\n\n\n\n<ul><li>Time\ninvolved in procurement or placing the order.<\/li><li>Availability\nof floor space<\/li><li>Quantity\nand types of materials used<\/li><li>Consumption\nof materials per year in the factory.<\/li><li>Minimum\nquantity of materials which can be advantageously purchased, etc.<\/li><\/ul>\n\n\n\n<p class=\"has-medium-font-size\">The following are the various levels set:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"867\" height=\"197\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/image-5.png\" alt=\"VARIOUS MATERIAL LEVELS\" class=\"wp-image-2782\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/image-5.png 867w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/image-5-300x68.png 300w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/image-5-768x175.png 768w\" sizes=\"(max-width: 867px) 100vw, 867px\" \/><\/figure>\n\n\n\n<p class=\"has-medium-font-size\"><strong><em>MINIMUM LEVEL:<\/em><\/strong> It is the level that describes the minimum amount of stock which must be kept in the store all the times. This level acts as safety measure, which is why it is known as \u2018buffer stock\u2019 or \u2018safety stock\u2019.&nbsp; The fall in stock of the material below this level acts as a warning to the management to procure the materials as soon as possible, otherwise the production process will be stopped. The minimum level must be set up by taking into consideration the following things:<\/p>\n\n\n\n<ul><li>Average\nrate of consumption of materials<\/li><li>Re-order\nlevel<\/li><li>Time\nrequired to obtain fresh supplies<\/li><li>Production\nrequirements as to materials.<\/li><\/ul>\n\n\n\n<p class=\"has-medium-font-size\">The minimum level can be calculated as follows:<\/p>\n\n\n\n<p class=\"has-pale-cyan-blue-background-color has-background has-medium-font-size\"><strong>Minimum Level= Re-order level- (Normal Consumption*Normal Delivery Time)<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Example:<\/strong> Suppose the normal consumption is 300 units per week, normal delivery time is 7 weeks, and re-order level is 2,400 units in a company. The minimum level will be calculated as:<\/p>\n\n\n\n<p class=\"has-medium-font-size\">Minimum Level= Re-order level- (Normal Consumption*Normal\nDelivery Time)<\/p>\n\n\n\n<p class=\"has-medium-font-size\">=2,400- (300*7)<\/p>\n\n\n\n<p class=\"has-medium-font-size\">= 2,400-2,100<\/p>\n\n\n\n<p class=\"has-medium-font-size\">=300 units.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong><em>MAXIMUM LEVEL:&nbsp; <\/em><\/strong>It is the highest level of stock that should be available with the company. The stocking of materials above this point indicates the locking up of capital and overstocking of materials in the concern. This level should be set by taking into consideration the following points:<\/p>\n\n\n\n<ul><li>Normal\nconsumption rate of material<\/li><li>Time\nrequired to obtain new supplies<\/li><li>Amount\nof working capital available.<\/li><li>Availability\nof storage space<\/li><li>Economic\norder quantity<\/li><li>Cost\nof carrying inventory or cost of storage<\/li><li>Seasonal\nconsiderations etc.<\/li><\/ul>\n\n\n\n<p class=\"has-medium-font-size\">The maximum level can be calculated as follows:<\/p>\n\n\n\n<p class=\"has-pale-cyan-blue-background-color has-background has-medium-font-size\"><strong>Maximum Stock Level= Re-order level+ Re-order Quantity- (Minimum Consumption*Minimum time required for delivery)<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">It can also be calculated by using the following formula:<\/p>\n\n\n\n<p class=\"has-medium-font-size\">Maximum Level= Re-order level- Consumption during the time\nrequired to get supplies at minimum rate* Economic Order Size<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Example: <\/strong>Suppose the re-order level is 54,000 units and re-order quantity is 36,000 units. The minimum consumption per week is 3,000 units and minimum re-order time is 4 weeks. The maximum stock level can be calculated as:<\/p>\n\n\n\n<p class=\"has-medium-font-size\">Maximum Stock Level= Re-order level+Re-order Quantity-\n(Minimum Consumption*Minimum time required for delivery)<\/p>\n\n\n\n<p class=\"has-medium-font-size\">= 54,000+36,000- (3,000*4)<\/p>\n\n\n\n<p class=\"has-medium-font-size\">=90,000-12,000<\/p>\n\n\n\n<p class=\"has-medium-font-size\">=78,000 units.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong><em>RE-ORDER LEVEL: <\/em><\/strong>It is the stock which is fixed between the maximum and minimum stock levels. It is the level at which the order for the purchase of materials is placed. It is set generally higher than the minimum level to cover any emergency which may arise as a result of abnormal usage of materials or unexpected delay in obtaining fresh supplies. The factors taken into account while fixing re-order level are:<\/p>\n\n\n\n<ul><li>Consumption\nrate of material<\/li><li>Margin\nof safety<\/li><li>Minimum\nlevel decided to be maintained<\/li><li>Cost\nof storage and interest on capital employed in materials.<\/li><li>Provision\nfor emergencies such as delay in supply and abnormal wastage etc.<\/li><\/ul>\n\n\n\n<p class=\"has-medium-font-size\">The re-order level can be calculated\nas:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <\/p>\n\n\n\n<p class=\"has-pale-cyan-blue-background-color has-background has-medium-font-size\"><strong>Re-order level= maximum stock + average consumption during normal delivery time<\/strong><\/p>\n\n\n\n<p><strong>OR<\/strong><\/p>\n\n\n\n<p class=\"has-pale-cyan-blue-background-color has-background has-medium-font-size\"><strong>Re-order level= Maximum consumption* Maximum delivery time.<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Example:<\/strong> Suppose maximum consumption is 15,000 units per week and maximum delivery time is 10 weeks. The re-order level is calculated as follows:<\/p>\n\n\n\n<p class=\"has-medium-font-size\">Re-order level= Maximum consumption* Maximum delivery time.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">Re-order Level= 15,000*10<\/p>\n\n\n\n<p class=\"has-medium-font-size\">=1, 50,000 units.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong><em>DANGER LEVEL:<\/em><\/strong> Danger level is fixed at a point below the minimum level and represents the limit at which special steps must be taken to obtain emergent supplies of materials.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">It can be calculated as follows:<\/p>\n\n\n\n<p class=\"has-pale-cyan-blue-background-color has-background has-medium-font-size\"><strong>Danger Level= Normal consumption per day\/week\/month* Time required to obtain emergent supplies.<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Example: <\/strong>Suppose the normal consumption of goofs in a week is 6,000 units and time required for emergent supplies is 1 week. The danger level can be calculated as follows:<\/p>\n\n\n\n<p class=\"has-medium-font-size\">Danger Level= Normal consumption per day\/week\/month* Time\nrequired to obtain emergent supplies.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">Danger level= 6,000*1= 6,000 units. <\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"2-economic-order-quantity\"><span class=\"ez-toc-section\" id=\"2ECONOMIC_ORDER_QUANTITY\"><\/span>2.<strong>ECONOMIC ORDER QUANTITY<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"has-medium-font-size\">Economic order quantity is that size of the order which given\nmaximum economy in purchasing any item of material. There are two main costs\nthat are considered while determining the economic order quantity, these are:<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Material Acquisition\nCosts<\/strong> are related to\nthe number of orders placed during a given period. These costs are part of\nwages and operating expenses for departments like production control,\npurchasing, receiving and stores is incurred for purchasing and possessing the\nmaterials.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Material carrying costs<\/strong> includes the interest charges on investment in materials, insurance costs, storage costs etc. these costs may be variable or semi-variable in nature as they tend to change nearly in direct proportion to the level of stock carried in the manufacturing concern.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"440\" height=\"220\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/Economic-Order-Quantity.jpg\" alt=\"economic order quantity\" class=\"wp-image-2795\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/Economic-Order-Quantity.jpg 440w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/Economic-Order-Quantity-300x150.jpg 300w\" sizes=\"(max-width: 440px) 100vw, 440px\" \/><\/figure>\n\n\n\n<p class=\"has-medium-font-size\">Calculation of Economic Order Quantity<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"332\" height=\"79\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/eoq.jpg\" alt=\"FORMULA OF EOQ\" class=\"wp-image-2777\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/eoq.jpg 332w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/eoq-300x71.jpg 300w\" sizes=\"(max-width: 332px) 100vw, 332px\" \/><\/figure>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"3-perpetual-inventory-system\"><span class=\"ez-toc-section\" id=\"3PERPETUAL_INVENTORY_SYSTEM\"><\/span>3.<strong>PERPETUAL INVENTORY SYSTEM<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"has-medium-font-size\"><a href=\"https:\/\/commerceiets.com\/perpetual-inventory-system\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"Perpetual Inventory System (opens in a new tab)\">Perpetual Inventory System<\/a> refers to a system of maintaining such records as will reflect the receipts, issues and balance of all items of materials in store all the times.<\/p>\n\n\n\n<p class=\"has-pale-cyan-blue-background-color has-background has-medium-font-size\"><strong>ACCORDING TO ICMA (Institute of Cost and Management Accountants), UK<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">\u201cPerpetual Inventory System is a system of records maintained by\nthe controlling department, which reflects the physical movement of stock and\ntheir current balance.\u201d<\/p>\n\n\n\n<p class=\"has-medium-font-size\">The records maintained in a manufacturing concern for material\naccounting are divided into two parts:<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Bin Card: <\/strong>It is maintained in the stores department and shows the quantities of materials received, issued and balance in hand after each receipt and issue.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Stores Ledger: <\/strong>It is maintained by costing office and deals with the quantities and values of materials received, issued and balance in hand.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"4-abc-analysis\"><span class=\"ez-toc-section\" id=\"4ABC_ANALYSIS\"><\/span>4.<strong>ABC ANALYSIS<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"has-medium-font-size\">ABC analysis is a technique that is followed for the purpose of\nexercising control over materials according to their importance or value.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Category \u2018A\u2019 <\/strong>consists of materials which consists 5% to 10% of the total items in a store and represent 70% to 85% of the total store value. It represents less items with high value.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Category \u2018B\u2019 <\/strong>consists of materials which consists of 10% to 20% of the total items in a store and represent 10% to 20% of the total store value. This category represents medium quantity and value.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Category \u2018C\u2019<\/strong> consists of materials which consists of 70% to 855 of the total items in a store and represent 5% to 10% of the store value. This category represents high quantity but small value.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">It is also known as Always Better Control method since it aims\nat obtaining maximum control over materials and minimum cost of control.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"5-ved-analysis\"><span class=\"ez-toc-section\" id=\"5VED_ANALYSIS\"><\/span>5.<strong>VED ANALYSIS<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"has-medium-font-size\">This technique of material control is used in connection with\nthe spare parts. Under this<\/p>\n\n\n\n<ul><li>\u2018V\u2019 stands for \u2018Vital\u2019<\/li><li>\u2018E\u2019 stands for \u2018Essential\u2019<\/li><li>\u2018D\u2019 stands for \u2018Desirable\u2019<\/li><\/ul>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Vital spare parts <\/strong>are those parts, the unavailability of which will interrupt the production process for quite some time.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Essential spare parts<\/strong> are those spares, the absence of which cannot be tolerated for more than few hours or a day.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Desirable spare parts<\/strong> are those spares which are needed but their non-availability for even a week or so will not lead to interruption in production.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"6-materials-turnover\"><span class=\"ez-toc-section\" id=\"6MATERIALS_TURNOVER\"><\/span>6.<strong>MATERIALS TURNOVER<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"has-medium-font-size\">Turnover of materials refers to movement into and out of an\norganization. It can be calculated by comparing balance of stores with the\ntotal issues or withdrawal during a particular period of time.<\/p>\n\n\n\n<p class=\"has-pale-cyan-blue-background-color has-background has-medium-font-size\"><strong>Material Turnover Ratio= Value of materials consumed during the period\/ value of average stock<\/strong><\/p>\n\n\n\n<p class=\"has-pale-cyan-blue-background-color has-background has-medium-font-size\"><strong>Average stock= Opening stock+ Closing stock\/ 2<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">High material turnover ratio indicates that the material item is\nfast moving and exhausts easily.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">Low material turnover indicates that the material items are slow\nmoving and organization should not go for over stocking of materials. <\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Example:<\/strong> Suppose the value of material consumed during the year is 12,000 and average stock available is 450 units, the material turnover ratio will be calculated as:<\/p>\n\n\n\n<p class=\"has-medium-font-size\">Material Turnover Ratio= Value of materials consumed during the\nperiod\/ value of average stock<\/p>\n\n\n\n<p class=\"has-medium-font-size\">= 12,000\/ 450<\/p>\n\n\n\n<p class=\"has-medium-font-size\">= 26.67 times.<\/p>\n\n\n\n<p><strong>MATERIAL CONTROL IN COST ACCOUNTING PDF<\/strong><\/p>\n\n\n\n<div class=\"wp-block-file\"><a id=\"wp-block-file--media-762a466e-b5bf-4d6c-9c5e-80412e67fd2e\" href=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/MATERIAL-CONTROL-IN-COST-ACCOUNTING-PDF-converted.pdf\">MATERIAL-CONTROL-IN-COST-ACCOUNTING-PDF-converted<\/a><a href=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/MATERIAL-CONTROL-IN-COST-ACCOUNTING-PDF-converted.pdf\" class=\"wp-block-file__button\" download aria-describedby=\"wp-block-file--media-762a466e-b5bf-4d6c-9c5e-80412e67fd2e\">Download<\/a><\/div>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/cost-accounting\/\">Cost Accounting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/scope-of-cost-accounting-pdf\/\">Scope of cost accounting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/elements-of-cost\/\">Elements of cost<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/types-of-cost\/\">Types of cost<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/material-control-in-cost-accounting-pdf\/\">Material control<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/perpetual-inventory-system\/\">Perpetual inventory system<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/pricing-of-materials\/\">Pricing of materials<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/bin-card\/\">Bin Card<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/store-ledger\/\">Stores Ledger<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/incentive-plans\/\">Incentive plans<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/overhead\/\">Overheads<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/accounting-treatment-of-idle-time\/\">Idle time<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/system-of-wage-payment-in-cost-accounting\/\">System of wage payment in cost accounting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-time-rate-system-and-piece-rate-system\/\">Time rate vs piece rate wage system<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/cost-centre\/\">Cost Center<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/labor-turnover\/\">Labour Turnover<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/difference-between-management-accounting-and-cost-accounting\/\">Difference between management accounting and cost accounting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/allocation-and-apportionment-of-overheads\/\">Allocation and apportionment of overheads<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-allocation-and-apportionment-of-overheads\/\">Allocation vs Apportionment of overheads<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/absorption-of-overheads\/\">Absorption of overheads<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/over-absorption-and-under-absorption-of-overheads\/\">Over absorption and under absorption of overheads<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/activity-based-costing\/\">Activity based costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-traditional-costing-and-activity-based-costing\/\">Traditional costing vs ABC system<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/reconciliation-of-accounts\/\">Reconciliation of accounts<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/unit-costing\/\">Unit costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/cost-sheet-format\/\">Cost sheet format<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/cost-sheet-vs-production-account\/\">Cost sheet vs production sheet<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/job-costing\/\">Job costing<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/batch-costing\/\">Batch Costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-job-costing-and-batch-costing\/\">job costing vs batch costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/contract-costing\/\">Contract costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-job-costing-and-contract-costing\/\">Job Costing vs Contract costing<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/process-costing\/\">Process Costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/process-costing-vs-job-costing\/\">Process costing vs job costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/joint-products\/\">Joint products<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/by-products\/\">By Product&nbsp;<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/equivalent-production\/\">Equivalent production<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/marginal-costing\/\">Marginal costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/applications-of-marginal-costing\/\">Application of marginal costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/cost-volume-profit-analysis\/\">Cost volume profit analysis<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/tools-and-techniques-of-marginal-costing\/\">Tools and techniques of marginal costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/budget\/\">Budget<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/break-even-point\/\">Break even point<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/process-of-budgetary-control\/\">Process of budgetary control<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/explain-the-advantages-and-limitations-of-budgetary-control\/\">Advantages and limitations of budgetary control<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/budgetary-control\/\">Budgetary Control<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/zero-base-budgeting\/\">Zero base budgeting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/standard-costing\/\">Standard Costing<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/variance-analysis\/\">Variance Analysis<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-standard-costing-and-budgetary-control\/\">Standard costing vs budgetary control<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-management-accounting-and-cost-accounting\/\">Management accounting vs cost accounting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-financial-accounting-management-accounting-and-cost-accounting\/\">Cost accounting vs financial accounting<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/www.linkedin.com\/in\/kajal-mahajan-7549b2197\/\" target=\"_blank\" rel=\"noreferrer noopener\">CONNECT ON LINKEDIN<\/a><\/div>\n<\/div>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"512\" height=\"152\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-cropped-Presentation-resize-1.jpg\" alt=\"material control in cost accounting pdf\" class=\"wp-image-4836\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-cropped-Presentation-resize-1.jpg 512w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-cropped-Presentation-resize-1-300x89.jpg 300w\" sizes=\"(max-width: 512px) 100vw, 512px\" \/><figcaption>MATERIAL CONTROL IN COST ACCOUNTING PDF<\/figcaption><\/figure>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-slideshare wp-block-embed-slideshare\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"Material control\" src=\"https:\/\/www.slideshare.net\/slideshow\/embed_code\/key\/3m9ue9Bjw0O8JP\" width=\"427\" height=\"356\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\" style=\"border:1px solid #CCC; border-width:1px; margin-bottom:5px; max-width: 100%;\" allowfullscreen> <\/iframe> <div style=\"margin-bottom:5px\"> <strong> <a href=\"https:\/\/www.slideshare.net\/KAJALMAHAJAN10\/material-control-197087216\" title=\"Material control\" target=\"_blank\" rel=\"noopener\">Material control<\/a> <\/strong> from <strong><a href=\"https:\/\/www.slideshare.net\/KAJALMAHAJAN10\" target=\"_blank\" rel=\"noopener\">COMMERCEIETS<\/a><\/strong> <\/div>\n<\/div><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>MATERIAL CONTROL IN COST ACCOUNTING PDF Material control is a system which ensures the provision of the required quantity of materials of the required quality at the required time with the minimum amount of capital investment. It can be defined as safeguarding of company\u2019s property in the form of inventory and maintaining it at the&#8230;<\/p>\n<p class=\"more-link-wrap\"><a href=\"https:\/\/commerceiets.com\/material-control-in-cost-accounting-pdf\/\" class=\"more-link\">Read More<span class=\"screen-reader-text\"> &ldquo;MATERIAL CONTROL IN COST ACCOUNTING PDF&rdquo;<\/span> &raquo;<\/a><\/p>\n","protected":false},"author":2,"featured_media":2778,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[187],"tags":[190,192,193],"_links":{"self":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/2775"}],"collection":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/comments?post=2775"}],"version-history":[{"count":0,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/2775\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media\/2778"}],"wp:attachment":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media?parent=2775"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/categories?post=2775"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/tags?post=2775"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}