Material cost control, Cost Accounting

Material Cost Control

Therefore Materials form an important cost of output units and that should be controlled.  Material Control is more than merely recording the accounting transactions relating to such material cost. Control must be implemented to ensure which material is available

  1. In suitable quantities
  2. In suitable quality
  3. In suitable location
  4. At an suitable time
  5. At the most economic cost

Control may be exercised on a number of points in the business cycle as given:

  1. Whenever the option is made like to the type and quality of material to be employed
  2. Whereas the purchase order is being placed along with the selected supplier
  3. On receipt of the material from supplier, verify the appropriateness of quantity and quality of materials obtained as:
  4. Whereas the material is held in store before employ:  It should be safe from theft and damage
  5. Whereas the material is issued from the store:  It should be issued to the accurate department
  6. Whereas the material is being employed for intended purposes as like an example of, the material must be employed to produce the desired output.

The material control system should attempt to ensure about the company does not incur costs in excess of an approved efficient level of expenditure. Require of adequate control routines will result in the incidence of costs in excess of an acceptable level, reduced profitability of production and increased operational costs.

Posted Date: 2/5/2013 4:32:44 AM | Location : United States

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