1. Lectur-10 Main Ahmad Farhan (ACA)
Material
Lectur-10
Main Ahmad Farhan (ACA)

2. Charge Of Loss
Normal Loss FOH cost
Abnormal Loss Job
Charge
Charge

3. Loss Normal Loss : The Loss which was expected
Abnormal Loss : The Loss which was not expected

4. Example
A & Co manufactured 500 ceiling fans to fill an order by incurring :
Direct material Rs. 150,000
Direct Labor Cost ,000
F.O.H (60% of Labor cost) ,000
Total Factory Cost ,10,000

5. Solution Work in process 310,000 Material 150,000 Payroll 100,000
F.O.H applied ,000

6. Rework Cost on Defective Work
Material Rs. 1,000
Labor ,000
F.O.H (60% of Labor cost) ,800

7. Solution Normal Loss Abnormal Loss F.O.H Control 5800 Material 1000
Labor
F.O.H
Material
Lab
FOH
Work in process

8. Solution Normal Loss Abnormal Loss Finish goods 310,000
Work in process ,000
Finish goods 368,000
Work in process 368,000

9. Per Unit Cost Cost of goods manufactured units manufactured
Normal Loss
Abnormal Loss
310,000
500
= 620
368,000
= 736

10. Example Spoiled inventory units 50 fans. Spoiled units
Total cost = 310,000 x 50 =31000
500

11. Example Spoiled inventory units 50 fans (Alternative option) .
Spoiled units
Material ,000 x =15,000
500
Labor ,000 x = 10,000
FOH ,000 x = 6,000
31,000

12. Spoiled Goods Normal Loss Abnormal Loss Scrap Inventory 10,000
FOH Control ,000
Work in process ,000
Scrap Inventory 10,000
Work in process 10,000

13. Spoiled Goods Normal Loss Abnormal Loss Finish goods 279,000
Work in process 279,000
Finish goods 300,000
Work in process 300,000

14. Per Unit Cost in Spoiled Inventory
Cost of goods manufactured
units manufactured
Per unit cost =
Normal Loss
Abnormal Loss
279,000
450
=620
300,000
= 667

15. Material Requisition
It is a document through which work station incharge received material from store.

16. Documents Material Requisition Work station incharge
Purchase Requisition Store incharge
Purchase order Supplier

17. Important Documents

18. Purchase Requisition Description Material code Quantity
Saba & Co
Lawrence Road Lahore.
PURCHASE REQUISTION
No: 614
Date of Request
Date Wanted
Request by department
Description
Material code
Quantity
Requested by
Approved by
COPY-1 PRCHASING DEP

19. Purchase Order STICH MASTER PURCHASE ORDER Township Lahore No. 2518
This number must appear on all packages and forms.
Date
To,
Ship to:
Date Wanted
Ship Via
FOB
Terms
Description
Catalogue No
Quantity

20. DEBIT NOTE Saba MASTERS Township Lahore. DEBIT NOTE No.-------
Date------
TO-(Supplier)
We are debiting your account with the value of under mentioned material for the
Reasons stated. Meanwhile we wait for your instruction.
Quantity
Description
Rate
Amount
Reasons
Date received
Goods Received Note No

21. Store Ledger Card Qty Rate Amount
Date Receipt /Consumption Issue /Sale Balance
Qty
Rate
Amount

22. Bin Card Re order level__________ Maximum level __________
EOQ _________________ Minimum level __________
Danger level ____________
Date
Ref
Quantity Received
Quantity issued
Balance

23. Inventory Turnover Ratio
Inventory Turnover ratio shows the stock position of the store room. In how many times inventory used.
Inventory Turn over Ratio
Cost of goods sold or Material consumed
Average Inventory

24. Average Inventory
Opening Inventory Closing Inventory 2

25. Example Opening stock 1000 units Material Purchase 7000 units
Closing Stock units
Material consumed Rs. 7500

26. Material consumed Solution Inventory Turn over Ratio Average Inventory
7500
( )/2 =
= 10 time

27. Expression Of Inventory In Days
No of days
Inventory Turn over Ratio
= 36 days 10