WIRC Bulletin - June 2018

Necessity & Importance of finished products inventory balancing

NECESSITY & IMPORTANCE OF FINISHED PRODUCTS INVENTORY BALANCING by CMA Rajesh Kapadia

Sub : Necessity & Importance of finished products inventory balancing

For any manufacturing unit, it has two main activities to perform :

To manufacture & To sell.

Here, CMA Department can play a very important role by preparing and if required submitting BALANCING OF KEY FINISHED PRODUCTS as mentioned in Annexure 1 to help management in their endeavour to monitor & control Productwise Production & Sale.

This BALANCING OF FINISHED PRODUCTS should be prepared atleast for key finished products constituting at least 70 % to 75 % of total sales.

Other Finished Products can also be considered for FINISHED PRODUCTS INVENTORY BALANCING.

Necessity & Importance of FINISHED PRODUCTS INVENTORY BALANCING

  • FINISHED PRODUCTS Inventory Balancing provides confidence to the management as well as to Statutory Auditors, Cost Auditors & Internal Auditors with respect to Quantitative Datails of PRODUCTWISE PRODUCTION & SALE which are Balanced Quantitatively. ( ANNEXURE 1 )

 

  • FINISHED PRODUCTS Inventory Balancing enables carrying out of Input / Output Ratios & thus in monitoring yields of the Products. ( ANNEXURE 3 )
  • FINISHED PRODUCTS INVENTORY BALANCING for each FINISHED PRODUCT can be carried out for the Company as a Whole, for Each Factory & for Each Plant within the Each Factory.
  • FINISHED PRODUCTS INVENTORY BALANCING for each FINISHED PRODUCT  facilitates to provide  Anti Dumping Submission ( Format E – Sales Qty, Sales Realisation ).
  • Submission of Details of PRODUCTION & CAPACITY UTILISATION for Cost Audit Report.

(Annexure 2)

  • For Various MIS Reports Submitted to Management with respect to PRODUCTION & SALE of PRODUCTS.
  • For preparation of Board Agenda where often PRODUCTION & CAPACITY UTILISATION ARE reported & presented to the Audit Committee and to the Board of Directors

ANNEXURE 1

TABLE SHOWING INVENTORY BALANCING OF EACH OF FINISHED PRODUCT

 

PRODUCTS UNIT OPENING STOCK PRODUCTION EXTERNAL SALES INTERNAL TRANSFERS CLOSING STOCK
1 MT
2 MT
3 MT
4 MT
5 MT

ANNEXURE 2

TABLE SHOWING PRODUCTWISE CAPACITY UTILISATION OF LAST 5 YEARS

 

PRODUCTS CAPACITY UTILISATION F.Y.2013-14 F.Y.2014-15 F.Y.2015-16 F.Y.2016-17 F.Y.2017-18
1     IN %
2     IN %
3     IN %
4     IN %
5     IN %
6     IN %
7     IN %

ANNEXURE -3

TABLE SHOWING CONSUMPTION OF KEY RAW MATERIALS PER MT OF FINISHED PRODUCTS

RAW MATERIALS FINISHED PRODUCTS MT / MT F.Y.2014-15 F.Y.2015-16 F.Y.2016-17 F.Y.2017-18
RAW MATERIAL 1 FINISHED PRODUCT 1
RAW MATERIAL 2 FINISHED PRODUCT 2
RAW MATERIAL 3 FINISHED PRODUCT 3
RAW MATERIAL 4 FINISHED PRODUCT 4
RAW MATERIAL 5 FINISHED PRODUCT 5
RAW MATERIAL 6 FINISHED PRODUCT 6
RAW MATERIAL 7 FINISHED PRODUCT 7

 

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