1. Cost Accounting
Karthikeyan R
Assistant Professor
Department of Commerce with Computer Applications
Dr. N.G.P. ARTS AND SCIENCE COLLEGE
(An Autonomous Institution, Affiliated to Bharathiar University, Coimbatore)
Approved by Government of Tamil Nadu and Accredited by NAAC with A++ Grade (3nd Cycle – 3.64 CGPA)
Dr. N.G.P.- Kalapatti Road, Coimbatore-641048, Tamil Nadu, India
Web: www.drngpasc.ac.in | Email: info@drngpasc.ac.in | Phone: +91-422-2369100
2. Material Control
• Material control is a system which ensures required quantity of
material of required quality at the right time & place with
minimum investment of capital.
• It is defined as “The regulation of the functions of an
organization relating to the procurement, storage & usage of
materials in such a way as to maintain an even flow of
production without excessive investment in material stock”.
Dr. NGPASC
COIMBATORE | INDIA
3. Objectives of Material Control
• Ensuring supply of adequate quantity of materials
• Optimum investment in materials
• Favorable terms of purchase
• Control of wastage
• Control of obsolescence & spoilage
• Proper reporting to management
• Prevention of misappropriation of materials
• Proper control system for settlement of invoices
Dr. NGPASC
COIMBATORE | INDIA
4. Essentials of Material Control
• Co-ordination
• Centralized purchasing
• Proper scheduling
• Classification
• Receipt of materials
• Usage of forms
• Storage
• Issue of materials
• Stock taking
• Level of stocks
• Economic order quantity
• Pricing of issues
• Control of materials
• Suitable reporting system
Dr. NGPASC
COIMBATORE | INDIA
5. Advantages of Material Control
• Ensures availability
• Reduces wastage
• Achieves economy
• Reduces loss
• Avoids stocks
• Perpetual system
• Ascertaining values
Dr. NGPASC
COIMBATORE | INDIA
6. Organization of Material Control
• Purchase department
• Receiving or inspection department
• Store keeping department
• Production department
• Stock control department
Dr. NGPASC
COIMBATORE | INDIA
7. Purchase Control
• It means procurement of materials, supplies machines, tools
and services required for the equipment, maintenance and
operation of a manufacturing concern.
Dr. NGPASC
COIMBATORE | INDIA
8. Purchasing Procedure
• Preparation of purchase requisition
• Obtaining quotation
• Placing of orders
• Follow up an inspection
Dr. NGPASC
COIMBATORE | INDIA
9. Objectives of Purchasing Department
• Specialization
• Economy in Purchasing
• Optimum investment
• Maintenance of relationship
• Developing alternative sources
• Adoption of best methods
• Sources of information
Dr. NGPASC
COIMBATORE | INDIA
10. Economic Ordering Quantity
• The Economic Order Quantity (EOQ) is the number of units
that a company should add to inventory with each order to
minimize the total costs of inventory—such as holding costs,
order costs, and shortage costs.
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Dr. NGPASC
COIMBATORE | INDIA
11. Pricing of Material Issues
• Computation of Total Cost of Materials Purchased
• Material Issue Procedure
• Methods of Pricing Material Issues
Dr. NGPASC
COIMBATORE | INDIA
12. Computation of Total Cost of Materials Purchase
• Discounts
– Trade Discount
– Bulk Discount
– Cash Discount
• Transport & Storage Cost
• Cost of Containers
Dr. NGPASC
COIMBATORE | INDIA
14. Methods of Pricing Material Issues
• Cost Price Method
• Derived from Cost Prices or Average Price Methods
• Notional Price Methods
Dr. NGPASC
COIMBATORE | INDIA
15. Cost Price Method
• FIFO
• LIFO
• Specific Price
• Base Stock
• HIFO
Dr. NGPASC
COIMBATORE | INDIA
16. Average Price Methods
• Simple Average
• Weighted Average
• Periodic Simple Average
• Periodic Weighted Average
• Moving Simple Average
• Moving Weighted Average
Dr. NGPASC
COIMBATORE | INDIA
17. Notional Price Methods
• Standard Price
• Inflated Price
• Re-use Price
• Replacement Price
Reference Book : T.S. Reddy and Hari prasad Reddy
Cost Accounting, Margham Publications
Dr. NGPASC
COIMBATORE | INDIA
