What is Material Cost?


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The term ‘materials’ refers to such commodities which are supplied to the manufacturing industry in their crude or original forms. They are raw in nature of have to be processed further. Broadly, these may be classified in the following groups: Raw materials, components, consumable stores, Maintenance Materials, Tools etc.

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Since the underlying purpose of cost accounting is to minimize the cost of production, it is important that an effective control is exercised over them. The storage space and storage costs re reduce thereby. Control over materials is also necessary to prevent extra-expenses on their unnecessary purchase and improper use. A regular supply of materials greatly helps the production schedule. It is necessary, therefore, that statements are prepared to accurately record the value of materials consumed by each department of job.

Material Cost Control envisages a proper organisatoin for the efficient purchasing and storing of the materials, and for making them issued to the departments or the cost-centres in appropriate quantities. At the proper times and valued at the right prices.

The materials cost control aims at keeping the material cost within reasonable limits, budgets or standards.

This control is exercised beginnings from the point the orders are prepared for being placed with the suppliers, and ending at the point the materials are effectively utilized in production or are disposed off otherwise.

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We, at BMS.co.in, believe in sharing knowledge and giving quality information to our BMS students. We are here to provide and update you with every details required by you BMSites! If you want to join us, please mail to contact@bms.co.in.

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