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Accounting for Materials

In: Business and Management

Submitted By FahimKS
Words 10570
Pages 43
ACCOUNTING FOR MATERIALS –
MATERIALS

Definition Materials: |
In cost accounting material is defined as the part of inventory. Basically, material and raw material are used for same purpose. This is main part of total cost of production. It can reduce or increase according to the fluctuation in production. So, this is very flexible and controllable source of production. For making furniture, wood is the material. 60% to 70% proportion in the total cost of production will be material cost. So, it is very necessary for producing any new product. Its cost will reflect the profit of company directly. This input can be stored and transported from one place to another.
Material control is a systematic control over the purchasing storing and using of material to minimizing the possible cost. In every manufacturing concern materials constitute an important factor of production. It is an important element of cost & covering 60-70 percent of the total cost of the production.
Material control may be defined as the level of material maintenance so as to ensure uninterrupted production and minimizing the investment of funds.
Thus material control is the proper control of material which reduces the cost of production, minimizing the investment of fund in the purchases of material & increases the profitability of the organization.
Material control is the system that ensures the provision of the required quantity of material of the required quality at the required time with the minimum of capital investment. It covers the following functions:
(i) Stock control
(ii) Scheduling of requirements
(iii) Purchasing
(iv) Receiving and inspecting
(v) Storing and issuing.

Need for Material Control:
One of the first steps in the installation of a cost system is planning the proper control of materials and supplies from the time orders are placed with…...

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