Assignment Help - homework help

  Issue Control

Introduction to Issue Control

Material is issued to production and greatest care is to be taken when issuing the material. The first thing is that material should not be issued to any department with no authorization. A Material Requisition Note is prepared through the department that is in requirement of the material and sent to the stores department. It is a written request created to the stores department for sending the material. The details of the material required like the quantity, quality, date through which it is needed etc, in the Material Requisition Note.

It is signed through the concerned department's authorized signatory. On the receipt of this requisition, the stores department takes act of supplying the needed material to the department. When issuing material care should be taken that particular quantity according to the need should be supplied. If there is extra material remaining after satisfying the requirements of the concerned department, to the stores department it should be returned. In such type of case, Material Return Note should be created and sent with the material. Likewise it is essential to prepare Material Transfer Note for recording the same if material is transferred from one site to other site with no being returned to the store. Appropriate documentation is very necessary for minimizing the probabilities of errors and frauds.

Pricing of Issues

One of the significant factors of issue control is of pricing of the issues. Material is issued to production and it is essential to observe the consumption value of the material. Though the question is that at what price the issue is to be charged. Clearly the reply is that at which they are purchased the issues should be priced at similar price. But it is not practical because it is virtually not possible to recognize the material issued. Though, it is essential to price the issues through using specific methods. The several methods of pricing of issues are described below.

1. First In First Out[FIFO]: - according to this method, material that is received first is issued first. So at the beginning of a period the material in stock is issued firstly and then the issues are made as per to the dates of purchases made. This technique is fairly logical because the sequence of issue is depends on the dates of purchases.

2. Last in First out [LIFO]:- The supposition under this technique is that the material that is purchased last is issued first to the production. So the issue should be charged at the current prices. The major benefit of this technique is that the issues are priced at the current prices and so consumption value is also the latest. This will formulate the product cost more realistic. Though, the inventory valuation will be at the older price like material in balance will be from the earlier batches of purchases. Valuation of inventory as per to this technique is not accepted for inventory valuation in the preparation of financial statements.

3. Highest in First out [HIFO]:- with in this method, the materials along with highest prices are issued first, irrespective of the date on which they are purchased. The essential assumption is that inflationary and influctuating market, the cost of material are rapidly absorbed into product cost to evade against risk of inflation. Like the issues are displayed at maximum prices, the product costs tend to be on the higher side and so this method is not appropriate in competitive environment.

4. Simple Average Cost Method: - within this technique, at the average price of the material purchased the issues are charged without taking into concern the quantities included in the same. For instance, at the average price of the three prices the issue will be charged, that is Rs.18 + Rs.19 + Rs.23 = Rs.60/3 = Rs.20 if materials are purchased in three batches at prices of Rs.18, Rs.19 and Rs.23. This technique is not very accepted since it takes into consideration the prices of dissimilar batches but not the quantities purchased in dissimilar batches. In the periods of price fluctuations this method is helpful but if fluctuations are too broad, the method may not be helpful.

5. Weighted Average Method: - This technique takes into concern the prices and the quantities of materials purchased. So, weighted average is computed after every receipt through dividing the total amount through the entire quantity. The issue is charged at prices arrived at as per to this calculation. For instance, if 3 consignments of materials are purchased at prices of Rs.10, Rs.12 and Rs.11 and the quantities that are included are correspondingly 1,000, 1,200 and 1,400. The weighted average price will be calculated like displayed below.

Rs.10 * 1,000 + Rs.12 * 1,200 + Rs.11 * 1,400 = Rs.10,000 + Rs.14,400 + Rs.15,400 = Rs.39,800 / 3,600 = Rs.11.05.

The consequent issue will be charged at this price. The major benefit of this technique is that it evens out the price fluctuations and decreases the number of calculations to be made.

6. Periodic Average Cost Method: - within this technique, instead of recalculating the simple or weighted average cost always there is a receipt, periodic average is calculated. The average might be calculated for the complete period. The price might be calculated as depicted below.

Cost of Opening Stock + Total Cost of all receipts / Units in Opening Stock + Total Units received during the period.

7. Standard Cost Method: - within this technique, material issues are priced at a predetermined standard issue price. Any variation among the actual purchase price and the standard price is written off to the Costing Profit and Loss Account. Standard Cost is a cost that is predetermined and if it is set correctly, it can be extremely effective. Though, revision of standard cost at regular intervals is needed.

8. Replacement Cost [Market Price]:- the cost at which material similar to that is to be replaced could be purchased at the date of pricing of the issues as different from the actual cost price at the date of purchase is known as the replacement cost. The price of replacing the material at the time of the issue of materials or on the date of valuation of closing stock is known as the replacement price. This technique is not suitable for standard accounting practices because it reflects the price that has not been paid actually.

9. Next In First Method: - within this method, the price quoted on the current purchase order or contract is employed for all issues until a new order is placed. So this technique is a difference of the Replacement Cost Method.

10. Base Stock Method:- with in this method, a specific quantity of materials is all the time held in stock and any material over and above this quantity is priced as per to any other pricing method such as First In First Out or Last In First Out or any other technique. For instance, it may be determined that 500 units would be held in stock and for materials over and above this FIFO technique may be followed. Though, this technique is not popular and also not well liked under standard accounting practices like it would result in stock valuation completely unrealistic.

Latest technology based Cost Accounting Online Tutoring Assistance

Tutors, at the www.tutorsglobe.com, take pledge to provide full satisfaction and assurance in Issue Control homework help via online tutoring. Students are getting 100% satisfaction by online tutors across the globe. Here you can get homework help for Issue Control, project ideas and tutorials. We provide email based Issue Control homework help. You can join us to ask queries 24x7 with live, experienced and qualified online tutors specialized in Issue Control. Through Online Tutoring, you would be able to complete your homework or assignments at your home. Tutors at the TutorsGlobe are committed to provide the best quality online tutoring assistance for Cost Accounting homework help and assignment help services. They use their experience, as they have solved thousands of the cost accounting assignments, which may help you to solve your complex issues of Issue Control. TutorsGlobe assure for the best quality compliance to your homework. Compromise with quality is not in our dictionary. If we feel that we are not able to provide the homework help as per the deadline or given instruction by the student, we refund the money of the student without any delay.
Home | Company Overview | Services | Discover Q&A | Sitemap | Contact Us | T & C | Refund Policy | Copyright Policy | Blog | Q&A | Directory

©TutorsGlobe All rights reserved 2022-2023.