Materials and Inventory Cost Control:

Materials control is the system that ensures the provision of the required quantity and quality at the required time with in the minimum of investment. It covers the following functions:

1. Stock control
2. Scheduling of requirements
3. Purchasing
4. Receiving and inspecting
5. Storing and issuing

Need for Materials Control:

One of the first step in the installation of cost and management accounting system is planning the proper control of materials and supplies from the time orders are placed with supplier until they have been consumed in the plant and office operation or have been sold as merchandise. Click here to read full article.

Requirements of a System of Materials control:

There are many requirements to implement an adequate satisfactory system of materials control. Click here to continue reading about these requirements.

Stock Control:

The materials purchased by a concern may be classified as stock items which are taken into store and held until required, or as direct deliveries to the point of consumption. The control of those materials which are stock items is known as stock control. Click here to continue.

Inventory Quantity Standards:

Ordering Level or Ordering Point or Re-order Level:

This is that level of materials at which a new order for supply of materials is to be placed. In other words, at this level a purchase requisition is made out. Click here to continue

Minimum Level or Minimum Limit:

The minimum level or minimum stock is that level of stock below which stock should not be allowed to fall. Click her to continue.

Maximum Level or Maximum Limit:

The maximum stock limit is upper level of the inventory and the quantity that must not be exceeded without specific authority from management. Click here to continue.

Danger Level:

Some enterprise also calculate danger level. When this level of stock is reached, then emergency steps are taken by the management to acquire material supplies. Click here to continue.

Economic Order Quantity EOQ:

Economic order quantity (EOQ) is that size of the order which gives maximum economy in purchasing any material and ultimately contributes towards maintaining the materials at the optimum level and at the minimum cost. Click here to read full article.

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