This document discusses material control and inventory valuation methods. It defines materials and supplies that are used in the manufacturing process. Material control aims to ensure adequate quality and quantity of materials for production with minimal costs. The objectives of material control are to prevent overstocking and understocking while protecting materials from loss and waste. Valuation methods like FIFO and LIFO are also covered, where FIFO assumes the first materials purchased are the first sold and LIFO is the opposite.

1. Material Control
Meaning and Needs of material control & Inventory
valuation Method
Presented To:
Prof. Amitabh Maheswari
Presented By:
Ram Dubey
Deva Sharma
Kuldeep Morey

2.  Commodities that are supplied to an undertaking to
be utilized in the manufacturing process or to be
transformed into products are called “Materials”.
 Materials constitutes major portion of the total cost
of the product.
 Supplies are also used for the manufacture of
product.
 Both materials and supplies are collectively called as
stores.
 The finished goods are termed as stock.
What is Material ?

3. Materials control refers to
managerial activities relating to
giving instructions or directions to
ensure maintaining adequate
quality and quantity of materials for
uninterrupted production process
with the objective of minimizing
material cost per unit.
What is Material Control?

4. The main objectives of materials control are presented below:
1. Ensures adequate supply of materials as and when required
for smooth production process.
2. Prevents over stocking and under stocking of materials.
3. Quick identification and supply of materials to the
production department.
4. Prompt issue of materials.
5. Safeguarding of materials from loss of stock by theft and
fire.
6. Protection of materials from unnecessary wastage of
materials.
7. Protection of stores against pilferage.
8. Minimization of storage cost.
Objectives

5. 1. Materials control eliminates wastage in use of raw materials
and supplies in course of purchase, storage, handling and use.
2. It ensures uninterrupted flow of right quality and quantity of
materials to the production department.
3. It reduces the risk of fraud and theft.
4. It facilitates the preparation of various monthly financial
statements.
5. The valuation of materials is very easy.
6. It requires minimum amount of capital to buy materials.
7. It fixes the responsibility on the part of the employers who are
handling the materials at the maximum.
Advantages

6. There are methods for value the
inventory:-
1. First-In-First-Out(FIFO)
2. Last-In-First-Out(LIFO)

7.  This method assumes that the first inventories bought
are the first ones to be sold, and that inventories
bought later are sold later.
 Advantages:
 When a company uses FIFO they are less likely to incur
old and outdated inventory that can no longer be sold.
 It is the most widely accepted way for inventory
management.
 When companies use FIFO they will constantly have an
updated reflection of the current market prices for the
items in their inventory.
First-In-First-Out(FIFO)

8.  I think one of the biggest disadvantages
to FIFO is the inconsistent prices given
to clients.
 The second disadvantage would be
clerical errors.
Disadvantage

9.  Last in first out is the opposite of FIFO in that the last items
acquired by the business are the first ones sold.
 The companies that decide to use LIFO over FIFO most often
do it for the tax advantages.
 Advantage:
 LIFO most often means lower profits for the company, but
when you report lower profits, you don’t have to pay as many
income taxes.
 This allows the business to have more cash-in-hand to use for
investment opportunities or to purchase more inventory.
Last-In-First-Out(LIFO)

10.  Because of inflation, where costs and expenses
continue to rise, LIFO will have a lower profit margin
than that of FIFO.
Disadvantage