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Unit 4: Material Control

2. Systematic inventory control can be exercised through this analysis on the basis of value of Notes
the materials. The high value materials of Group A are rigidly controlled which finally led
to lesser investments.
3. Scientific system helps to lessen the storage cost of the inventory.

Self Assessment

State whether the following statements are true or false:

5. As per ABC analysis the A category of inventory includes the inventory of lesser percentage
in volume and Greater percentage in Value.
6. Cash discount is the discount granted by the supplier to the buyer of materials at the
moment of bulk purchase.
7. The bulk purchase order increases the ordering cost of the materials.
8. The greater the size of the order leads to reduce the number of the orders in procuring the
materials.


Caselet

ennila & Co. is a direct exporter as well as market leader in the domestic market
among acute competition. The firm is expected to have an opening stock of 2000 kg
pof raw materials at the rate of ` 4 per kg. The firm should have to price the issue of
materials in two different ways, one for the domestic market and another one for the export
order which was already obtained.

date Receipts Qty kg Rate per kg ` Issue Qty kg
Jan6 400
Jan10 800 4.40
Jan15 600 4.80
Jan20 1000
Jan21 400
Jan 24 1000 5.20
Jan 25 600
Jan 28 400

Use of Perpetual Inventory Records and Continuous Stock Verification

perpetual inventory represents a system of records maintained by the stores department. It
comprises Bin Cards and Stores Ledger.
Bin cards maintain quantitative records of receipts, issues and closing balances of each item of
stores. Separate bin cards are maintained for each item. Each card is filled up with the physical
movement of goods i.e., on its receipt and issue. Like bin cards, the stores ledger is maintained
to record all receipts and issue transaction in respect of materials. It is filled up with the help of
goods received note and material issue requisitions.
A perpetual inventory is usually checked by a programme of continuous stock taking. Continuous
stocktaking means the physical checking of these records (which are maintained under perpetual

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