WIRC Bulletin - July 2018

NECESSITY & IMPORTANCE OF PACKING MATERIALS INVENTORY BALANCING by Rajesh Kapadia

Sub:  NECESSITY & IMPORTANCE OF PACKING MATERIALS INVENTORY BALANCING

Packing is an integral part of not only production, but also distribution and marketing.Packing is necessary for protection and convenient handling of the product.

It is well known that packing cost is considerable in many industries like toothpaste, cosmetics, Formulations etc.

So, it becomes imperative for management to monitor, control and reduce packing material cost to make its product competitive in the market.

Here, CMA Department can play a very important role by preparing and if required submitting BALANCING OF KEY PACKING MATERIALS as mentioned in Annexue 1 to help management in their endeavour to monitor, control &  reduce packing material cost content of the total product cost.

This BALANCING OF KEY PACKING MATERIALS should be prepared atleat for key packing materials of the product. I.e.A & B Category Packing Materials constituting 70 % to 75 % of total Packing Material Cost.

C Category Packing Materials can also be considered for PACKING MATERIALS INVENTORY BALANCING.

  

PACKING MATERIALS INVENTORY BALANCING CONSISTS OF THE FOLLOWING:

Opening Stock : Book Stock & Physical Stock should agree

Purchases : It should be as per Goods Received Vouchers

Consumptions : It should be as per Goods Issue Vouchers

Material Transfer to another Plant : It should be as per Material Transfer Notes

Closing Stock : Book Stock & Physical Stock should agree

Necessity & Importance of PACKING MATERIALS INVENTORY BALANCING

  • PACKING Materials Inventory Balancing provides confidence to the management as well as to Statutory Auditors, Cost Auditors & Internal Auditors with respect to Quantitative Datails of Concerned Packing Materials which are Balanced Quantitatively. (Annexure 1 )
  • PACKING MATERIALS INVENTORY BALANCING for each Packing Material can be carried out for the Company as a Whole, for Each Factory & for Each Plant within the Each Factory.
  • Submission of Details of Packing Materials Consumed for Cost Audit Report.
  • For Various MIS Reports Submitted to Management with respect to Key Packing Materials.
  • For preparation of Board Agenda where often Packing Materials Consumption is reported & presented to the Audit Committee and to the Board of Directors
  • Packing Materials Inventory Balancing enables working out No of Bags actually used for packing 1 MT of Finished Products ( including normal handling loss, if any ) ( Annexure 2 ).
  • Packing Material Inventory Balancing enables submission of MIS ( Annexure 3) showing Consumption of Packing Materials ( Qty, Rate & Value )

ANNEXURE – 1

TABLE SHOWING BALANCING OF KEY PACKING MATERAILS

PARTICULARS OPENING STOCK PURCHASES TOTAL AVAILABLE CONSUMPTION TRANSFER TO OTHER PLANT CLOSING STOCK
PACKING

MATERIAL 1

PACKING

MATERIAL 2

PACKING

MATERIAL 3

PACKING

MATERIAL 4

PACKING

MATERIAL 5

PACKING

MATERIAL 6

RAW MATERIAL 7

ANNEXURE -2

TABLE SHOWING CONSUMPTION OF NO OF BAGS  PER MT OF FINISHED PRODUCTS

PACKING

MATERIALS

FINISHED PRODUCTS UNIT F.Y.2013-14 F.Y.2014-15 F.Y.2015-16 F.Y.2016-17
PACKING

MATERIAL 1

FINISHED PRODUCT 1 NO / MT
PACKING

MATERIAL 2

FINISHED PRODUCT 2 NO / MT
PACKING

MATERIAL 3

FINISHED PRODUCT 3 NO / MT
PACKING MATERIAL 4 FINISHED PRODUCT 4 NO / MT
PACKING

MATERIAL 5

FINISHED PRODUCT 5 NO / MT
PACKING

MATERIAL 6

FINISHED PRODUCT 6 NO / MT
PACKING

MATERIAL 7

FINISHED PRODUCT 7 NO / MT

 

 

Annexure 3

Consumption of Packing Materials-

Quantity & Value

F.Y.2017-18 F.Y.2016-17 F.Y.2015-16
Qty Rate Value % of Total

Value

Qty Rate Value % of Total

Value

Qty Rate Value % of Total

Value

Packing Material 1
Packing

Material

2
Packing Material 3
Packing

Material

4
Packing Material 5
Packing Material 6
Packing

Material

7
Packing Material 8
Packing Material 9
Packing Material 10
Packing Material 11
Packing Material 12
Packing Material 13
Packing Material 14
Other Packing Materials
Total Packing Materials
 

 

 

 

 

 

 

 

Leave a Reply