Materials management at Factory Z153 - General Department of Engineering

Products. Main raw materials depend on each specific enterprise, specific products such as iron and steel in mechanical manufacturing factories, cotton in textile factories...

- Auxiliary materials: These are materials that have a side effect in the manufacturing process of the product. Auxiliary materials are used in combination with main materials to improve the features and quality of the product such as changing the color, shape, taste or for preservation. Auxiliary materials are also used to help machinery, equipment and labor tools operate normally. In addition, auxiliary materials are also used for technical needs.

- Fuel: Auxiliary materials used to provide heat energy for the production and business process such as: coal, firewood, gasoline, gas...

- Spare parts and repairs: are details, accessories, machinery and equipment used for repairing or replacing parts of machinery and means of transport such as bearings, gaskets, etc.

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- Construction materials and equipment: Including materials, equipment, tools, instruments, and structures used for basic construction work.

- Packaging materials: Used to wrap and contain products to make them more complete or contain finished products for consumption.

- Scrap and other materials: Including materials discarded during the process.

Production or liquidation of assets such as: planks, scraps, scrap paper... but still recoverable and have use value to reduce production and business costs.

 Classification by source of raw materials According to this classification, raw materials are divided into:

- Raw materials purchased from outside.

- Materials produced by the unit itself.

- NVL receives joint venture capital.

- Materials provided by superiors.

 Classification according to purpose as well as content of regulations reflecting material costs on the enterprise's raw material accounting accounts is divided into:

- Direct materials used for production and manufacturing of products.

- Raw materials used for workshop management needs and enterprise management department.

machine

2.1.2.2 Material Evaluation

Material valuation is the use of monetary measures to express the cost of materials according to certain materials, ensuring the requirements of authenticity, accuracy and consistency. According to the general regulations of international standards, the management of imported and stored materials must reflect the "original price", which is the actual cost that the enterprise spends to obtain materials.

 Calculate the price of imported raw materials:

Actual price of raw materials in stock includes: Purchase cost, processing cost and other directly related costs incurred to obtain raw materials at the current time and state. Actual price of raw materials in stock depends on factors: supply source, VAT calculation method.

 For purchased materials:

Actual price of raw materials

Purchase price recorded

= +

on invoice

The items

tax included in price

Expense

purchase

The items

deduction

Costs directly related to purchasing include: Transportation, loading and unloading, storage costs during the purchasing process and other costs directly related to purchasing inventory (packaging costs, costs of independent purchasing departments, warehouse rental costs, yard rental costs, etc.)

 For self-processed raw materials imported into warehouse:

Actual price of raw materials in stock

Actual price of raw materials

export processing

Expense

processing

Inventory processing costs include: Costs directly related to the product such as direct labor costs, fixed general manufacturing costs, and variable general manufacturing costs incurred in the process of processing raw materials.

 For outsourced raw materials for processing and warehousing:

Actual price of raw materials in stock

Actual price of raw materials leaving warehouse

= +

outsourcing processing

Cost of outsourcing processing

Actual price of donated materials:

Other related costs

Actual price of raw materials in stock

Material price

= +

on the market

directly to the reception of raw materials

 Actual price of the part.

NVL is granted, received as joint venture capital or equity capital contribution

Actual price

Raw materials in stock

Price by council

= +

Confirmed Pricing

Related costs

other direct

For units subject to VAT under the deduction method, the actual price of imported materials does not include VAT. For units subject to VAT under the direct method, the actual price of materials includes VAT.

 Calculate the price of raw materials in stock:

1- Calculated according to actual price

+ Calculation method: For each batch of goods exported, calculate based on the actual price of the specific batch of goods imported into the warehouse (regardless of the time of import and export of materials).

+ Advantages : Material price calculation is done promptly and through price calculation .

Raw materials out of stock, raw materials accounting.

math can

track the shelf life of each batch

+ Disadvantages : Only suitable for businesses with insurance conditions

each batch of imported raw materials

2- Calculated by average cost

 Method of calculating average price of entire reserve period

+ Calculation method : For warehouse delivery transactions arising during the period, temporary accounting does not take into account the price, the warehouse delivery note is only recorded in kind, at the end of the month when closing

After completing import and export operations, accountants calculate the average cost of the entire period.

Actual price of raw materials leaving warehouse

In there:

Quantity

= ×

Raw materials out of stock

Average warehouse price

Actual value in stock + Actual value imported

= period

Number of items in stock + Number of items imported during the period

+ Advantages: simplicity.

+ Disadvantages : not accurate because it does not closely follow the fluctuations in raw material prices, only applicable to businesses applying the periodic declaration method or businesses using raw materials with little price fluctuation .

 Method of calculating average price after each import (continuous average)

complete)

Unit price of warehouse after each import

Actual value of raw materials in stock after each import

Actual amount of raw materials in stock after each import

+ Advantages : Relatively accurate reflection of raw material prices because it meets the timely requirements of providing accounting information .

+ Disadvantages : Calculate many times , take a lot of effort.

 Method of calculating average price at the end of previous period:

Average unit price

last period

Actual price of raw materials in stock at the end of the previous period

Number of raw materials in inventory at the end of the previous period

+ Advantages : Simple calculation, no need to calculate many times .

+ Disadvantages : Lack of accuracy , especially when raw material prices fluctuate continuously.

3- Calculate price using the first in first out method (FIFO)

+ Calculation method : According to this method, raw materials are calculated at the actual price of the warehouse based on the assumption that the batch of raw materials imported into the warehouse first will be exported first, so the quantity of raw materials exported from the warehouse belonging to which import is calculated according to the actual price of that import.

+ Advantages : Allows accountants to calculate the price of raw materials in stock promptly and accurately, without having to pile up work at the end of the month .

+ Disadvantages : Requires strict and detailed accounting organization, fully tracking quantity and unit price of each import .

4- Calculate price using the last-in, first-out (LIFO) method

+ Calculation method : This method is based on the assumption that the last imported materials are exported first, the actual price of exported materials is calculated based on the last imported price, then calculated based on the previous imported price.

+ Advantages : Helps the business costs of the enterprise respond promptly to the market price of raw materials. When the price of materials tends to increase, this method makes the value of exported materials increase and the value of inventory materials decrease.

+ Disadvantages : Also requires accountants to closely monitor each entry in detail .

5- Calculate price by accounting method (price coefficient)

- Accounting price is a stable price that businesses can use for a period of time.

long time to account for import, export, inventory of raw materials while not calculating the price

its actual price. To determine the actual price of raw materials at the end of the period, the accounting of raw materials at the end of the period, the accountant must adjust from the material price according to the accounting price to the actual price through the price coefficient.

+ Calculation:

Accounting price of raw materials exported from warehouse

Quantity

Materials Out of Stock

Unit price

accounting

At the end of the period, determine the price coefficient:

Coefficient

price in period

Actual price of raw materials in stock + Actual price of raw materials imported during the period

Accounting price of raw materials in stock + Accounting price of raw materials imported during the period

Price coefficient can be calculated for each type and group of materials. Adjust the accounting price of materials imported and exported to actual price through price coefficient.

Actual price

Raw materials out of stock

Raw material accounting price

out of stock during the period

Price factor

during the period

Price coefficient can be calculated for each type and group of materials. Adjust the accounting price of materials imported and exported to actual price through price coefficient.

Actual price of raw materials leaving warehouse

Raw material accounting price

= ×

out of stock during the period

Price coefficient in the period

Actual price

need adjustment

Actual price of warehouse – Accounting price of warehouse

Accounting price of goods sold × (Price coefficient – 1)

+ Advantages : Allows close combination of detailed accounting and general accounting of materials in pricing work, so pricing work is carried out quickly and does not depend on the quantity of materials, the number of times each item is imported or exported .

+ Disadvantages : Have to go through many steps .

2.2.2 General issues of materials management in enterprises

2.2.2.1 Concept of management

Management is the purposeful impact of the subject on the managed object to achieve the set goals of the organization.

From the above concept, it can be seen that management includes two parts:

+ Administrative subject: Is the agent that creates the impact of administration or we can understand this is the person who makes decisions for the organization.

+ Subjects and objects of management: These are the objects that receive the impacts of the management subject, including: households, labor groups or means of production...

2.2.2.2 Materials management requirements

In current conditions, the rational and economical use of raw materials

is it effective

increasingly important how to

same mass

NVL, can produce the most products, at the lowest cost and still

quality assurance. Therefore, material management is an inevitable and objective issue, it is necessary for all production and business methods. Whether management is good or not depends on the ability and qualifications of the management staff.

For businesses, material management can be considered from the following aspects:

- In the purchasing stage: Enterprises must conduct regular supply

through the source of input materials, promptly meeting production requirements. To do so, in the purchasing stage, it is necessary to manage well the quantity, specifications, and types of materials to suit production needs. It is necessary to find a source of raw material revenue.

at reasonable prices compared to market prices, low purchasing costs. This helps to minimize costs and lower prices.

- In the storage and preservation stage: To ensure continuous production, adequate raw materials must be stored, without causing production interruption, but also must not be stored in excess.

storage

excessive

capital stagnation, waste of space. At the same time, it must be implemented

fully implement the preservation regime according to the physical and chemical properties of the material. Besides

Therefore, enterprises must establish necessary reserve standards with maximum and minimum levels for production, establish standards for material consumption in use as well as reasonable loss standards in transportation and storage.

- In the usage stage: Enterprises need to provide raw materials at the right time, in the right quantity, quality and at the right time for the production process. Not only that, enterprises also need to calculate fully, accurately and promptly the price of raw materials included in the cost price of finished products. Therefore, in the usage stage, it is necessary to organize well the recording and reflecting the situation of output and use of raw materials in production and business to ensure economical and effective use.

- In the scrap recovery stage: Any business has a lot of scrap and waste products, which can be reused or remanufactured, liquidated or sold to units that can be remanufactured and processed into other products. Therefore, the recovery of scrap and waste products must be well organized and tight to save material costs and at the same time reduce prices.

2.2.2.3 Material management function

- Determine material needs

+ Purchase plan

+ Reserve plan

+ Usage plan.

Materials management at Factory Z153 - General Department of Engineering - 2

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