This document discusses stores (materials) control. It describes stores as an important current asset and how efficient control helps minimize costs. There are three types of store organizations: centralized, decentralized, and centralized with sub-stores. Centralized stores are controlled from one location while decentralized stores have independent departments. Centralized with sub-stores has a main store and sub-stores. Key aspects of stores control covered include requisitioning, bin cards, stores ledger, issue control, and spoilage. The storekeeper's duties in receiving, storing, and issuing materials are also outlined.

1. STORES CONTROL
DR. MOHAMED KUTTY KAKKAKUNNAN
Associate Professor
P.G. Dept of Commerce
NAM COLLEGE KALLIKKANDY
Kannur –Kerala – India

2. STORES CONTROL
• An important part of material control
• Stores (stock) is an important current asset
• Stores control helps to minimize material cost,
loss due to wastage, theft,
misappropriation, deterioration, damage etc.
• Efficient and effective control over stores is
essential for cost control
Stores Department – Entrusted with management
and administration of stores

3. Types of Stores (Organization of Stores
Department)
Three types of stores
1. Centralized stores
2. Decentralized stores
3. Central stores with sub-stores

4. Centralized stores
All materials are received, kept and issued from
one stores department (Centralized store)
Advantages
• Better control over stores
• Better layout of stores is possible
• Less storage space is required as stores are kept
to minimum
• Investment in stock is minimized
• Economical in many respects
• Experts can be appointed

5. Disadvantages of Centralized Stores
• Increases transportation cost - if the central
store is located in distant place or production
units lay in different parts
• Delay in getting stores
• Greater risk of loss in case of fire
• Break-down in transportation may affect
operations

6. Decentralized Stores
Independent stores are maintained for different
departments
Storekeeper in each department handle stores
Department requiring the materials draw it from
their stores.
Advantages are the disadvantages of centralized
stores
Disadvantages are the advantages of centralized
stores

7. Centralized Stores with Sub-stores
• In large factories and organizations, with
production facilities or operations in different and
distant
• A central stores and several sub-stores in
different parts
• Central stores receive all stores
• Issues in large quantities to the sub-stores on the
basis of requisition made by the storekeeper of
the sub stores
• This system is more or less similar to the petty
cash system – thus, it is also known as imperest
system of stores control

8. The Storekeeper
The person in charge of stores department,
responsible for stores control
Must possess proper technical knowledge and skill
in materials kept in stores, stores administration
and control
Duties and responsibilities
• Receiving the stores – ensuring receipts are in
accordance with the order
• Entering all the receipts in the Bin Cards
• Keeping every item of stores in the allotted space

9. Duties Contd…
• Maintaining the stores in an orderly and tidy manner to
facilitate easy handling and verification
• Ensuring issue of materials is made on the basis of
proper documents
• Requisitioning for purchase when the quantity of
stores reaches at the re-order level
• Ensuring optimum level of inventory (not exceed
maximum level or go below the minimum level)
• Checking bin card balances with the physical quantities
• Supervision and control of subordinates
• Preventing unauthorized person from entering the
stores

10. Requisitioning for Stores
The store keeper has to ensure proper supply of
stores (materials) as and when required by
various departments.
When the quantity reaches at a particular level,
send requisitions for fresh issue or purchase of
materials
To ensure proper stores control and to eliminate
or minimize various costs associated with
stores, different stock levels will be calculated.

11. STORES (MATERIAL) RECORDS
Two important records are maintained in stores
A. Bin Card and
B. Stores Ledger
B I N C A R D
A record maintained in the store by the store-keeper
showing the quantity of receipt and issue of
material
A bin card for each item of materials
Kept in the store, generally in the bin which contain
the material

12. Bin Card Preparation (Maintenance)
Two columns – for receipt and issue, after each
issue and receipt the balance is also shown, an
additional columns for order
Store-keeper is responsible for difference in the
physical quantity of stock and balance shown in
the bin card
Also known as Bin Tag or Stock Card. May contain
different stock levels
Helps to assess the balance of material or inventory,
without checking the physical quantity

13. Double Bin System
• The bin or rack or shelf (where the material is kept)
will be divided into two parts –
• 1. for keeping the minimum quantity of material
• 2. for keeping the remaining stock.
• In the ordinary case, materials kept in the minimum
stock level part will not be issued, so as to maintain
the minimum quantity.

14. STORES LEDGER
• A record maintained by the Costing
Department, which shows the receipt, issue
and balance of material in the store in terms
of both quantity and values.
• Like bin card, there will be a stores ledger for
each material

15. Differences between Bin Card and Stores Ledger
Bin Card Stores Ledger
Records quantity only
Records both quantity and
values
Maintained by store-keeper Costing Department
Posted before the transaction
Always posted after
transaction
Each transaction is individually
posted
Transactions may be
summarized and posted
Usually kept inside the store Kept outside the store

16. Need for Bin Cards (are bin cards necessary?)
Two records – (bin card and stores ledger) serve the same
purpose, duplication of work – no need for bin cards
Necessary due to the following reasons
• Storekeeper is responsible for maintenance of stores,
thus, he should have a record of movement of stores
• Responsible for difference in physical quantities, helps
to frequent check
• Entries are made before or immediately after the
transaction, provides up-to-date information on
balance
• Bin cards and stores ledger facilitate cross check of
issues, receipts and balance of materials

17. ISSUE CONTROL
Materials are -
• kept in the store for issuing to different jobs,
process, etc as and when required
• issued by the storekeeper on the basis of proper
requisition made by the responsible person
Material Requisition: A requisition made by the
responsible person (foreman, Production
manager etc) for issue of materials required with
quantities.
• Kept as a document by the store keeper
• Material are issued only on the basis of material
requisition. Authorization for issue

18. Bill of Materials
• Is a complete list of all materials required with
quantities for a particular job, process or
order
• A single document and serves the same
purpose of different material requisitions to
be made for different materials to be used for
a job, process, or order

19. Surplus or Excess Materials
May be returned or transferred to another job, process or
order
Material Returned Note ( Stores Debit Note / Shop Credit
Note) is prepared by the department when the surplus
material is returned to the store.
Triplicate – on receipt of the returned material, store
keeper signs the note and one is kept with him, one copy
is send to the returned department and another is send
to the costing department
Discourage transfer - chances for misappropriation, fraud,
wastage etc.
Allow on the basis of proper Material Transfer Note.
Prepared by the department with excess material

20. Material Abstract
An analytical statement prepared periodically on
the basis of the various material requisition
notes, returned notes and transfer notes.
• Shows the value of materials consumed in
each job at a glance.
• Shows the total amount of material to be
debited to each job and overheads.

21. Spoilage
-refers to the production that does not meet the
dimensional or quality standards in such a way
that it cannot be rectified economically and is
junked (debris) and sold for a disposal value
Treatment of spoilage
Cost of normal spoilage is bone by good units of
output
Cost of abnormal spoilage is transferred to
costing profit and loss account