C&fas
C&fas
C&fas
CHAPTER-1
LABOUR ACCOUNTING
OBJECTIVE
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Workers entering into the Factory by that period will remove metallic
disc (ticket) from the board placed near the gate. These tickets they will
deposit in the box at the shop.
After closing of the gate say at 7.30A.M the representative of the gate
office (Labour Bureau) prepares a list of tickets not removed from the
board.
The gate is then opened and late comers are allowed to enter the gate up
to I hour i.e. up to 8.30A.M. No one is normally allowed to enter after
that time without the special sanction of the General Manager. The late
comers are required to deposit their tickets in the respective boxes at the
gate specially provided for the purpose to record the particular hour at
which a late comer is admitted. The representative of the gate office
prepares a list of ticket. Numbers who have entered late indicating the
time of late, this indication of late is 0-15 minutes, 15-30 minutes, 30-45
minutes, and 45-60 minutes.
Thus two sets of documents are generated at the gate. Casualty memo/
Presentee- memo, late memo.
After the individual reported in the shop and deposited his ticket; the
shop also prepares another list of individual reported (without indication
of any time). This document is also sent to Labour Bureau for cross
checking with the two documents mentioned earlier.
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Men who take short leave are granted leave passes by the JWM of the
shop. Those leave passes are deposited at the gate and handed over to the
Labour Bureau. Part Leave is generally granted in terms of quarter of an
hour.
This muster roll along with the leave passes, Over Time note of the
previous day and into casualty report and late memo of the current day
are to reach Accounts office every day in the morning and as such also
called Morning mustering.
On receipt of the muster roll from the Labour Bureau, the present day’s
attendance should be checked with reference to casualty memo/
presently memo, late memo. The previous day’s attendance to be
checked with reference to leave passes, overtime memos. Discrepancy if
any to be reported through the discrepancy report. Alteration if any can
be made by Labour Bureau with proper alteration. The auditor of Labour
Section must initial in the muster roll in token of having audited the
same.
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The weekly total of the attendance, overtime hours, bonus hours, night
shift hours etc., will be also copied in the Accounts copy of attendance
mentioned earlier.
At the end of the month: On receipt of the muster roll on the day
following the close of the month in the Accounts Office, the total
number of days attended by each worker, overtime worked by each
worker, bonus hours admissible to each worker, total night shift hours
worked by each worker as mentioned in the muster roll will be checked
with reference to the record maintained by Accounts Office in IAD
(FAC) 74. This will than become the input for preparation of Wage Roll.
If an I.E. is absent for the whole the Saturday, he is not entitled for this
benefit of Saturday Bonus but if present for part of a day his attendance
will be as under.
Wages payable to Industrial employees for any wage period will include:
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2. Other element of pay e.g. Idle Time Pay, Over Time Pay, Leave
Pay, Holiday Pay, Injury Pay, Segregation Pay etc.
5. Duty pay at basic monthly rate is also called time wage in respect
of D. W. This is because the day workers are to be paid on time
basis without regard to output.
As per wage act 1936 , the per day wage of a day worker is basic pay
rate/ total number of days the workers is supposed be present in a month
i.e. N-(S+H) where N stands for No. of days in the month, S number of
Sundays and H number of holidays.
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(N –S – ST) X 8 + ST X 4¾ Hours
In case of gang piece worker the total input hours of the gang is arrived
at by adding the input hour of each individual worker of gang and the
output hour is calculated as the total hours on the basis of the PW Card.
The profit % of the gang is calculated as under:
{ (Output hours of the gang – Input hours of the gang) / Input hours of
the gang } X 100 %
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If a worker works partly as day worker and partly as piece worker during
a wage period; he will be considered as piece worker for the entire wage
period and will be entitled to holiday pay for the holiday (s) falling
within the wage period; irrespective of whether the holidays is in the part
when he is a day worker or piece worker.
Payment under section 59 of Factory Act 1948 arises for work done
beyond 9 hours a day and 48 hours a week.
The total overtime hours worked will be divided into overtime hours
worked under departmental rule and under Factory Act.
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P where stands for Basic rate of monthly pay and D stands for all
allowances other Transport allowance and small Family norms
allowance.
(a)DA + CCA
200
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Where P stands for Basic monthly rate of pay and D stands for all
allowances except TA and SFA.
Night Shift and benefits given to IES for working in Night Shift
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The formula for calculation of NDA (Night Duty Allowance and night
shift bonus are as under)
DA half days = Number of days of half Pay Leave during the month.
DA amount =DA (Percentage) basic Monthly rate of pay x (DA full days+.5x DA half
days) 100 N - (S +H) for day worker and (N-S) for Piece Worker
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Industrial Employees are entitled to injury pay for the period spent in
hospital when to authorize by the General Manager for any accident while
on duty. This amount is calculated on the basis of basic rate of monthly
wage, as calculated above depending on whether he is a DW or PW. This
amount however will be deducted from the compensation, if any, paid
under workmen compensation Act. All allowance like DA, HRA, CCA,
TA is also admissible on the pay.
Under Factory Act 59, Small Family allowance is treated as a part of basic
wage and as such is considered for calculation of OT rate of IE up to 48
hours as well as beyond 48 hours.
Transport Allowance
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Incentive Bonus.
The following categories of day worker (other than un- skilled worker)
who are deployed on maintenance work of machines in a shop, gas plants,
stream generation, compressed act supply plants, Industrial under supply
Plant, electrical power supply plants, (irrespective of whether these plants
are situated inside the factory or not) are entitled to a separate element of
wage called Incentive Bonus.
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When the Wage Roll was prepared manually each element of wages were
calculated manually. The help of Facit / Calculator like machines were
taken for speedy addition, multiplication, division. The accuracy of the
preparation was ensured before release of the role by the following steps:
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EDP Section will print out a report called “Change Pay” which indicates
individual wise list of change in the entitlement by comparing the same
work last month. This should be compared with “Changed PIS” as
amended to verify that Pay has been changed for only those individual
whose change in PIS have been authorized by Labour Section. If the two
are not matching EDP section should be asked to reprocess wage roll.
EDP section prints out check list of in the same page format of data
sheet and also indicates the column where page total done manually
does not agree with the total done by computer. The same may be
due to wrong totaling or wrong data entry. That page to be 100%
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(ii) To verify the rates: - The print out of “Pay Register or Pay Slip”
is also received in Labour Section. This two report indicates rate for
each element of wage admitted to individual.
At least one case of each scale / grade / trade to be selected and the
rate as well as amount of wages calculated to be verified by Auditor
/ section Officer. This will establish that the system (Program) has
been formulated correctly.
Once all these checks are exercised the Master Roll should be
passed for payment for the gross amount by Accounts Officer.
When the Account Officer is on leave / out of station the senior
AAO / Section Officer is allowed to pass the roll provisionally
subject to countersignature by GM of the Factory. The master rolls
so passed by AAO / SO (A) are subject to post audit by Accounts
Officer on his return. Under this arrangement no responsibility
devolves on the General Manager as the correctness of the master
rolls signed by him.
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The claim preferred by the Factory are data entered by EDP Section and
a check list showing the months drawn pay, due pay, attendance as is in
the record of EDP section is printed out. The same is printed in duplicate
copy and handed over to Labour Section. Auditor /Section Officer /
Accounts Officer must exercise check in amount O/o on that document
with reference to hard copy of records maintained in Labour Section.
The same to be authenticated for pricing by Labour Section indicating
whether separate supplementary bill to be printed or the same to be
included in the next months pay as miscellaneous earning. The bill in
main priced and bill along with due drawn statement is handed over to
labour section. The same to be compared with the authenticated copy
before pass for payment of the bill.
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DISBURSEMENT CERTIFICATE
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Cost Accounting
Financial Accounting
The Pay Head of Industrial Employees is 54/ 805/ 003. To have detailed
idea of expenditure, unit controls have been allotted for Overtime Pay,
Educational assistance etc. The Pay Head will be charged with entire
amount while paying any advance or adjusting any debit / credit
accounted for in the Disbursement Certificate .Similarly, the Pay Head
will be credited as minus charge with the entire amount while adjusting
any Treasury Receipts for amounts deposited against the advance drawn.
The amount of unclaimed wages is not charged to the Pay Head in the
Financial Accounts although the same is fully charged in the Cost
Accounts. The difference between Cost and Financial Accounts
represented by the unclaimed wages which is treated as Outstanding
Liabilities.
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(a) For an adult one day for every 20 days of work and
(b) For a child (both Artisan. / messenger Boy) one day
for every 15 days of work.
The leave so admissible shall be exclusive of all
holidays.
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The Service Book of all individuals who are due to retire within three
years following the date of audit will be included in the selection for test
check within the percentage stated.
1) Date of Birth.
2) Date of Appointment with the age prescribed for Govt.
Service
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SUMMARY
1. Daily working hours of an Ordnance Factory are 8 hours without
recesses & lunch break.
2. The factory gate will open half an hour before the time fixed for
commencement of work and will be closed just at the time of
commencement.
3. The procedure of attendance for the late comers will be made
indicating late by 15 minutes; 30 minutes; 45 minutes and 1 hour
4. Since the Ordnance Factories is working 44 3/4 hours weekly instead
of 48 hours, booking of attendance of the Industrial Employees on
Saturday will be made as under:
0 13/32
1 17/32
2 21/32
3 25/32
4 29/32
4 3/4 (Full present) I
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There are 15 Questions carrying equal mark. One mark will also be deducted
for each wrong answer
Total 30 Marks
[Tick the appropriate Box, you have selected as a correct answer. Once ticking
need not to be scored out or any new answer is not permissible as a fresh ticking
for seems to be right answer]
A B C D E
7 '/z hrs 8 hrs including 9 hrs 8 hrs with 8 hrs
recess lunch break excluding
& recess
Lunch break &
Lunch break
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A B C D E
A B C D E
44 hrs 50 hrs 48 hrs 46 hrs 44 3/4 hrs
Q5. Booking of attendance for present on Saturday for one hour is marked:
A B C D E
29/32 21/32 25/32 17/32 I
Q6. Day Workers are those:
A B C D
Who work in the Who are being Who are being Answer given in A, B &
Day time only paid with paid with C are not correct
reference to reference to their
output attendance
Q7. Which one of the answer is not found correct for calculation of amount for
(1) Time Wages, (2) Overtime Pay & (3) Overtime Bonus admissible to a
Day Worker?
A B C D
[(Basic Rate of [(Basic Rate of [Basic Rate of [(P+2d)/200] X No of
Pay)/ (N-S)] X No Pay)/ {N- Pay/200] X No OT Bonus hours
of days present (S+H)}] X No of OT hours admissible
of days present worked
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A B C D
Own basic pay Maximum of Average of scale Minimum of the
the scale of pay of pay scale of pay
Q9. Maximum profit% admissible to a Piece Worker during a wage period is:
A B C D
80 70 75 None of A, B & C
Q10. Which classes of Day Workers are not entitled to Incentive Bonus?
A B C D E
Highly Skilled Un skilled Skilled Semi Skilled Master craft man
Q11. Incentive Bonus payable to a maintenance worker deployed in the Estate area
will calculated on the basis of:
A B C D E
50% of profit 45% of 50% of 50% of average No answer given
earned in the profit earned profit earned profit earned by in A, B, C & D is
Estate by by the the sections correct
Maintenance Production
section section
A B C D E
Last day of the 10th of the First week of Last week of 10th of the 2nd
respective 1st month the 2nd the1st month month following
month following month
Q13. Which answer is correct? The Receipt side of Disbursement Certificate shows
A B C D
Amount received Net payment Actual payment Deduction made
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Q. 14. Which item does not reflect in the Payment side of Disbursement Certificate?
A B C D
Deduction made Total amount Any receipt for Net payment payable
passed in Master un -disbursed
Roll wages remitted by
money Order
Q15. Which is not the primary document for Cost Accounting of Labour?
A B C D E
PW Cards DW Cards Financial Allocation Sheets Cost Punching
Punching Medium
Medium
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ANSWERS TO QUIZ
ASSESS YOURSELF
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CHAPTER- II
MATERIAL ACCOUNTING
OBJECTIVE
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INTRODUCTION
- Right Time, i.e. when the prices are just right. This is
especially true of commodities like Steel, Copper etc. which
are cyclical in nature as far as prices are concerned also, it
must be ensured that the purchases do not result is an
abnormally large idle inventory.
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Once the material are purchased, the role of maintaining proper accounts
begins. It is the job of the Accounts Office to ensure that:
2) all issues from the store are accounted for properly and in
time. Priced Store Account (PSA) is a macro account
generated by the computer which gives the overall amounts
for a month. Priced Store Ledger (PSL) is a detailed, item
wise account. Both these accounts will not give the right
picture if all Demand Notes, Return Notes floated in a
month are accounted for.
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The same Principal is followed for each item of final product say B, C
…
Now the total requirement of raw material A111 is calculated as.
A111 required for item A + A111 required for item B + A111 required for item
C.
ii) After computerization of Factories: - The vocabulary number is
allotted by OFB and 1 year in advance production plans are intimated to
GMs.
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(i) Item Code (ii) Item Description (iii) MP Sheet No. & Date
(iv) Required For production of items (OFB Vocabulary
code) (v) Production Plan for the item (vi) Estimate
number (vii) Output –consumption ratio (viii) Total Qty
required (ix) Qty required for next six months (x) Qty on
stock (xi) Qty for which order has already been placed
(dues) (xii) Net quantity required.
Audit of MP Sheet.- At the time of taking action against any proposal
for procurement the MP Sheet is to be audited to justify the need. While
doing that it is to be ensured that there is a control mechanism for
detecting the progress of MP Sheet once prepared through the system.
Advantage of System
It has more relation to the coming year’s production plan than on the
previous year’s history.
Any change in the estimates affected by revision in estimate can be
promptly reflected in the provisioning action.
Disadvantage of System
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If suitable checks are not in built into the system may lead to over-
provisioning.
SHIS – The full form is Store Holder Inability Sheet. The name itself
specifies that in same is prepared by the store holder while proposing for
any procurement. This can be merely termed as Store Holders proposed
justification for procurement. It contains stock in hand, dues, average
consumption, liabilities in sight and hence requirement to meet this
liabilities. The requirement for next six month is calculated on the basis
of the formula.
Audit of SHIS
M P Sheet SHIS
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These are the Factory level TPC. For purchases beyond Rs.50lakh, there
are separate levels of TPC in Ordnance Factory Board level. TPC
recommends the placement of order on the basis of deliberations made
and duly considering the following factors:
When the decision is arrived at, a minute of TPC is made and get signed
by all the Members of TPC.
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GOVT OF INDIA
MINISTRY OF DEFENCE
10-A, S. K. BOSE ROAD
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Enclo: 09
Sd/-
(Anil Kumar)
Secretary
Ordnance Factory Board
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Encl: As stated
(A.K.BAGCHI)
Jt.DIRECTOR/BS
ADDL. DGOFs
All MEMBERS/OFB
All Sr. General Managers/ General Managers
Sr. Principal Director/ NADP
All Principal Directors/OFIOLs
All Officers concerned
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Details in Annexure I
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TYPE OF RECEIPTS
Apart from the above the following internal transactions of the Factories
are also accounted for as receipt.
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TYPE OF ISSUES
Material is issued by the Store Section of the Factory for the following
purposes:
Beside the above the following transactions of the factory are also
accounted for as issues.
M.I.S. is prepared for almost all receipts in the Factory. The MIS is
converted in to a receipt voucher by allotting a No. of the respective
Series to which the Store pertains. Issues from the factory godown or
Stores to Shops/ Sections are done through Demand Notes. Any returns
of such stores to godown are done through return notes. Issues to any
other concern are done through Issue Vouchers.
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The receipt and issue vouchers after pricing are entered in to the monthly
Priced Store Account (PSA) under different Codes for different sources
of receipts and issues. Similarly, the value of Demand and Return Notes
is entered in the PSA to arrive at the net receipt and net issue. Thereafter,
these are added with the closing balance of the previous month to arrive
at the total raw – material inventory at the end of the month.
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In the case of all Stores for which payments are made/ book debits are
received / priced copies of issue vouchers are furnished, hundred percent
linking has to be done. Linking consists of two parts. :
WHAT IS PSA-PSL
A priced Store Account detailing the receipt and Issue transactions from
stock in each month under the various heads specified in Forms IAF
(FAC) –15 for Receipt and IAF (FAC)- 16 for issues is prepared by
Material Section every month after generation of Computerised PSA
report for the concerned month and submitted to the Costing Section by
15th of the month following for the purpose of posting in Principal
Ledger.
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At the end of the year a Consolidated PSA and PSL are also generated
through Computer containing all transactions pertaining to the year.
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Likewise, Issue Vouchers received from the factory are also entered in
the schedule of vouchers to watch continuity and sent to EDP section at
the end of the month. Receipt Adjustment Vrs, (If any) is also forwarded
to EDP Section.
Demand and Return Notes received from Factory are entered in serial
nos. in the register of schedule of demand and return notes ( IAF ( Fac-
37) ) to watch the receipt of all Demand and Return Notes issued by the
factory. All DN/RN received by M section thus scheduled are dispatched
to EDP section by 5th of the following month.
DATA ENTRY
All the data pertaining to Receipt Voucher, Issue Voucher DN/RN are
entered in the respective file and a checklist is generated to examine that
there is no error in the entry or duplication or Missing of voucher is
there. Special attention is paid to see that the UDQ, PSACD entered is
correct. In some factories data are captured from factory source.
For pricing of Rt. Vrs. Other than IFD Rt. Pricing (SO) bar of Update
menu is selected. In case of any error, re-pricing may also be done in the
system after revising the necessary entry.
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Pricing of Demand & Return Note and Issue Vouchers are made through
system w.r.t. Average Ledger Rate (ALR i.e. V1+V2/Q1+Q2)
For any Rt.Vr.Adjustment data entry is made in a file called RTAJ file
giving previous value, Original Value, Difference of Value, previous
voucher No. etc. After running a programme PSL check the system
automatically creates a file for Issue Adjustment of concerned DN/RN.
PSL - CHECK
BPLN CHECK
The system verifies the sequence of documents with reference to the Bin
Page Line Number. The BPLN maintained in the Master is taken as the
1st number after which transaction sequence is checked. A message
comes while checking PSL “Document Missing” is indicative of a
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PSL- UPDATE
PSD Update menu of Update Menu pad of main menu is selected for the
same, Invsys then asks for year &month of PSL and whether Binder
wise Ledger Report necessary. On entering the same Opening Balance of
PSL for the month is shown on the screen. This OB should be checked
with CB of earlier month. Then an option comes in the screen whether to
allow Unorthodox Balance. If ‘NO’ is selected rejected issue
transactions in PSL check is separately kept in a temporary file. If ‘YES’
are selected system prices all transaction with ALR. Unorthodox
Balance is looked into later by user.
PSA GENERATION
Difference between book value and sale value Plus to Loss Code
(Issue) Loss occurring in transaction Minus to Sale Code (Issue)
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Difference between Sale value and Book value Plus to Sale Code
(Issue) Profit occurring in transaction Plus to Profit Code (Rt)
Necessary data entry for adjustment for PSA only is made in PSAADJ
file then PSA option of PSL submenu of Report menu is selected for
PSA generation. Invsys asks certain information like month and year of
last PSL month and year of PSL, Receipts upto the end of last month and
whether we wish to add adjustment for PSA only etc. on entering this
information last CB of PSA comes in the screen. After verification of the
same with last months report ‘Entry’ key is pressed for PSA creation.
Output report PSAREP, TXT is generated.
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ADD LESS
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Store Accounts
SNo Dr. side Amt Cr. Side
1 To store in hand as on 1st 1 (a) By stores issued to
April shop less return
(b) By issue to NMD for
Prod. Of army
2 To cost of stores taken on 2 By sale of stores.
Charge during the year.
3 To stores received from 3 By stores issued to
Def. Department 1. Army
2. Navy
3. AF
4. Other Def. Department
4 (a) To transfer for 4 a) By stores
capital A/C transferred to
(b) To transfer for stock capital A/C.
pile b) By stores
transferred to
stock pile
5 To stores received from 5 By stores issued to other Fys
own Fy manufacture
6 To IFD stores 6 By issue on payment
7 To profit on scale of stores 7 By misc. issues
(a) Normal (b) Abnormal
8 To surplus at stock taking 8 By actual Losses
a) Loss of scale of stores
(i) Normal, (ii) Abnormal
b) loss of stores on charge
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In the Ordnance Factories surplus stores and waste stores are sold
through auction. The entire mechanism of sales is controlled by the
Factory management as well as Accounts authorities jointly.
Such stores which are sold to external agencies are categorized under
following broad head
1) Waste product
2) Scrap
3) Surplus Stores
4) Obsolete Stores
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OBSOLETE STORES: These are the stores which have been declared
surplus due to obsolescence. Such store usually arises due to sudden
cancellation of orders by the indentor for specific job order which is
unique and can not be utilized otherwise.
STEPS OF DISPOSAL
Reserve prices are fix by the factory management with the concurrence
of LAO. If there is any disagreement meeting factory management and
LAO the case should be referred to DGOF for decision. Reserve price
should be fixed not more than 2 days before the auction. The above price
should made known to the auction supervisor of the date of auction
itself, half an hour before the auction. All concerned officers including
Accounting Officers connected with the fixation of reserve price and the
auction supervisor must treat such price as strictly confidential.
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On receipt of approval full details are noted in the Sales Register, MRO
received for Security Deposit is adjusted and noted in the Security
Deposit Register, MRO received for sale value is adjusted for sale value,
sales tax etc. after verification of monthly statement. The MROs are
forwarded to Accounts Section of the Office of the PCA (Fys) in the
normal manner. Action to pay dues on account of sales tax/excise duty to
the relevant authorities should be taken on receipt of contingent bill from
the factory. All the sale proceeds will be reflected in the Cash
Compilation Statement viz. Deduct head under "Revenue Expenditure"
for realization on account of "Sale of Scrap" and revenue head for
receipts for realization on account of sale of surplus stores.
In the case of stores disposed by DGS&D, credit for sale proceeds are
passed on by the PAO concerned to the CDA concerned depending on
the location of auction. The credits are compiled to the final factory head
of account and the sale accounts are forwarded to Store Section, who
allocated the amount to the respective factories and forward the sales
account to the concerned Accounts Officer for linking. On receipt, the
sale accounts are linked by the A.O.
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All expenditure for stock pile items will be meet from major head 130A
- Defence Capital Outlay. This is a capital head and though stock pile
items are purchased from capital head, they differ from capital assets as
they are stores items intended for future production.
The factory will maintain a separate Bin Card for each of these items. A
separate Store Ledger known as Capital Store Ledger should be
maintained by the ledger group of Accounts Office. This ledger like the
Priced Store Ledger will also be located in the Provision Section in order
to afford facilities of quick reference to the management.
No stock pile item should be used by the factory with prior approval of
the OFB. As and when reserve material are required to be used in
production, they are to be first transferred from and to the reserve stock
and working stock should be meet only on transfer voucher. The turn
over of reserve items, if and when ordered from time to time by the
OFB/DGOF should likewise be made on transfer voucher.
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SUMMARY
1. MP Sheet is a computerized report generated on the basis of input
data received from Factories regarding opening balance of stock,
estimates for material requirement, punched cards containing
information relating to primary documents of stores viz. Receipt
Vouchers, Issue Vouchers, Demand Notes, Return Notes,
Adjustment Vouchers. This is an essential tool for preparation of
material budget and can be used as a control for verifying the
necessity for procurement of any item.
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(a) Level-I
Sr. GM / GM Chairman
Addl. GM/MM Member/MM
(b) Level-II
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(d) Level-IV
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ISSUE VOUCHERS
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The PSL under each ledger folio shows Opening Balance of store,
details of store receipt during a month through Receipt Vouchers,
Return Notes or Adjustment Receipt Vouchers; details of Issues
made from stock through Issue Vouchers, Demand Notes,
Adjustment Issue Vouchers and Closing balance of the store at the
end of the month.
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13. Reserve Stock Pile Item: Strategic items of stores which are very
difficult to procure in case of failure of normal supplies are
classified as Stock Pile Items. A reserve of such stores is built up
separately from working stock to meet the demands of future
production in case of failure of normal supplies. The stock Pile
items are procured from Capital Head and a separate Bin Card is
being maintained for these types of stores. A separate Store
Ledger known as Capital Store Ledger is also being maintained
for these kind of stores. Receipt & Issues of Reserve Stock Pile
Items are being carried out through "R" series of vouchers.
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SELFASSESSMENT QUIZ
There are 15 Questions carrying equal mark. One mark will also be
deducted for each wrong answer.
Total 30 Marks
[Tick the appropriate Box, you have selected as a correct answer. Once
ticking need not to be scored out or any new answer is not permissible as
a fresh ticking for seems to be right answer]
Q1. Auditing requirement of a MP Sheets which information does not
match to be reflected in the MP Sheet?
A B C D E
Output Qty required Warrant MP Sheet Estimate
consumption for next six Number Number & Number
ratio months date
Q2. Which item does not contain in a Store Holder Inability Sheet:
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A B C D E
Where the Where the When it is Where the When it is a
demand is value is proprietary demand is non
very urgent large& nature of very urgent proprietary
and likely sufficient item and and likely nature of
sources are time is there is only sources are item but
not known available source of known only one
supply exists source of
supply exists
Q4. A CST was prepared for a stores valuing Rs. 30,000/- and placed
to TPC for approval. Which level of TPC is required in this case?
A B C D E
Level-IV Level-II Level-III No TPC Level-I
A B C D E
From Loan From estate From Trade From UK From COD
produce
A B C D
To other Ord. To Production To Loan To Capital
Factory Section
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Q8. Against the pricing of Issue documents from store certain answer
has given in the box "X". If you don't agree the answer given in
the box "X", please give the correct answer under the box "Y"
quoting only A or B or C or D
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A B C D E
Receipt Red Demand Issue Material
Voucher Demand Note Voucher Inward Slip
"S" Series Note "S" Series (MIS)
A B C D
TPC LEVEL- TPC LEVEL- TPC LEVEL - TPC LEVEL –
III I IV II
Jt. GM in GM Works Manager AGM/ Jt. GM in
Charge in Charge Charge
A B C D E
"N" Series "S" Series "R" Series "P" Series "M" Series
Q12. Which is/are not the Primary Store document for preparation of
Material Abstract?
A B C D
Demand Note Red Return Issue Voucher Return Note
Note
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Q13. Which section of the Factory Management will open a ledger folio
number of any store?
A B C D
R&E MCO WO PV
A B C D E F G
Plus Qty Minus Nil Qty Plus Qty Plus Qty Minus Minus
& Qty& & Plus & Nil & Plus Qty& Qty&
Minus Nil Value Value Value Plus Minus
Value Value Value Value
A B C D
Monthly (Total (Last quarterly Qty required for each
consumption consumption consumption) item of manufacture
X6 during last 12 X 2 X No of article
months /12) X required to be
6 manufactured for
coming 6 months
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ANSWERS TO QUIZ
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ASSESS YOURSELF
CHAPTER-III
COST ACCOUNTING
OBJECTIVE
After completing this Chapter you will be able to understand:
- Types of Extracts.
- What is a Warrant?
- Work Orders & its purpose.
- Standard Estimates - their pricing & re-pricing system.
- Cost Card - What does it contain?
- Posting of actual figures from various tabulations in the
Cost Card.
- Semi - Concept, Necessity, Pricing & final treatment in
Cost Accounting.
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CLASSES OF EXTRACTS
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Open Extracts
An Open Extracts allotted for Class II, the General Manager can carry
out work of Payment Services in each case up to the limit of his financial
power without asking separate Extracts to the OFB. Similarly, a
WARRANT
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Duration of Warrants
Normal duration of Warrants for work other than Capital Works (New or
Repair) is Six months only. Approval for further extension may be
obtained from DGOF
Action Taken by Accounts Office on receipt of Warrant
A warrant is received by Costing Section of Accounts Office & issued
by Works Office of the Ordnance Factory. A warrant contains two parts:
Manufacturing Warrant
Material Warrant
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Work Orders
A Work Order is a codified list consisting of nine digits and represents
for which service is to be rendered by its first two digits, nomenclature
of the subject store to be manufactured by next five digits and last two
digits will indicate the code number, of the shop/section who will
undertake the manufacture. Where a operations is passed through
various shop/section for completion of the manufacture the last two
digits in the case will be 00.
Work Order Serial
01 For Fixed Charges
02 For Variable Charges
03 For Process Material
04 For Capital Services
05 For Repairs & Conversion
06 For Cost of Packing
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Source of Postings
(1) Labour Abstract: This is prepared / printed on the basis of
PW/DW Cards after levying DA on pre-determined
percentage. This forms the actual labour charge. On these
labour charge variable & fixed overhead charges for the
Warrant is also levied at pre-determined percentage.
(2) Material Abstract is prepared / printed from the primary
documents called Demand Notes and Return Notes.
When a Cost Card is opened the monthly expenditure against the warrant
from Labour and Material Abstract is posted Section-wise. On taking the
labour payment for full quantity ordered against a Warrant. On such
declaration the Accounts Office will undertake closing of the said Cost
Card. They will prepare Estimated Cost of the Warrant with reference to
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Cost Abstract:
Cost Abstract is the codified printout of primary documents. It is printed
monthly showing the Work Order, Warrant No. nature of document etc.
Nature of Cost Tabulation:
It is printed from PW Cards, DW Cards, Allocation Sheet, Labour
Punching Medium I, II, III. It also shows Sections in which cost occurs.
Material Abstracts:
It is printed from Demand Notes and Return Notes, Adjustment
vouchers. Against each entry document no. nature of document are also
shown. Return Notes are exhibited as minus.
T V Abstracts:
When the cost is transferred from one Work Order to another Work
Order, the same is exhibited in this abstract
Subsidiary Abstract:
SVC-Sectional Variable Charges, It is printed from collection of figures
from Labour, Material Abstracts and also from Overhead Allocation
against 02 Series of Work Orders.
SFC-Sectional Fixed Charges, It is equally printed in respect of 01
Series of Work Orders.
Master Cost Cards (MCC)
It is a Work Order summary of tabulation printed quarterly from above
three main Abstracts.
PRINCIPLES OF COST ACCOUNTING: OVERHEADS
ACCOUNTING
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STORE A B C TR TR X Y Z
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1. Costing Section
Scrutiny with reference to Warrant Register to ensure that
all incomplete Warrants have been included
2. Material Section
Verify with reference to the posting in the relevant Material
Warrants that the quantities of Material shown are correct
and the Materials were priced at the same rate in which
corresponding Demand/Return Notes on bulk drawal were
priced.
3. Labour Section
Verify with reference to the posting in the relevant
Manufacturing Warrants that the operation shown as
performed are correct and pricing of these operations are at
correct rates.
4. Costing Section
Final scrutiny with reference to the Cost Cards and
Production Ledger Cards and will levy DA and Overheads
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CLASSIFICATION OF CAPITAL
Capital Assets in a factory are classified under three main heads:
i) Building
ii) Machinery
iii) Other items
The items falling under Building are;
(a) Industrial Building i.e. Building within the four walls of
the FY whether used for Production or Non-production
purposes any factory sections (except offices) outside
factory walls.
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Charges
001101 C (3) MC (4)
01/805/01
1000/-
The first three digits on the top are meant for unit of control, the next
three digits indicate Fy codes and the seven digit code denotes the
detailed classification code. The unit control code is operated along with
the classification code for specifying the nature of transactions. The unit
control code 001 denotes pay of all Gazetted Officer serving the factory.
The list of unit control heads to be prefixed to classification code heads
have been circulated by Accounts Section vide circular no.
A/11/0102/XV dated 26.7.96.
Great care has to be taken in making out the Punching Media as these
forms the basis for financial compilation as well as adjustments for
cheques drawn on various treasuries, receipts deposited through MRO
etc.
The classification codes for different types of transactions are provided
in the 'Classification Hand Book' Defence Services (for Service Heads)
and pamphlet of Revenue, Debt and Remittance Heads (for RDR
Heads).
How financial transactions are brought to Account
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PRODUCTION ACCOUNT
Production Account –
(i) is a ledger account compiled by Branch Accounts Officer(s)
and consolidated by PCA (Fys), Kolkata.
(ii) Figures under Debit and Credit items are compiled by
taking into account the various transactions of revenue
expenditure and revenue receipts affecting cost of
production of articles produced during a financial year.
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4 Shop copy and Accounts copy Wts. Are floated by Fy transactions are posted both by
of Warrants (both Material and Fy & LAO. After completion, Shop copies of completed
Manufacture). Wts are received from Fy. By LAO. Posting into the
Cost Card and P.L. Card are required to be verified with
the postings made in Wts.
Sl
Name of document Remarks
No
5 Cost Abstracts viz. Labour Cost Abstracts are generated in EDP by LAO based on
with Overhead Abstract the primary documents received from Fy. (Viz. PW/DW
Material Abstract T.V. Card, Material Demand/Return Notes Transfer Vrs. etc.)
Abstract (including and some documents generated by LAO viz. (Labour
Foundry/ Process T.V. or Cost Punching Mediums, Overhead Allocations,
allocations Master Cost Card Foundry/Process T.V./Allocation) etc.
Tabulation (M.C.C.)
6 Manufacturing A/c- Statement Compiled by LAO monthly showing Rent,
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PRODUCTION ACCOUNT
ANNEXURE - `A'
Debit Item
Sl.
Particulars Source of Figure Remarks
N.
1 Work-in- Should be equal to the value of work-in- Figure should also agree
Progress As progress on 31st March shown against with the opening value of
on 1.4. Cr. item 3 of Previous year's WIP shown in work-in-
Production Account (Closing balance of progress A/c of Principal
previous year to be brought forward as Ledger.
opening WIP)
2 Direct Labour Total value of labour expenditure (other Figure should agree with the
than expenditure of 01 & 02 series) total Direct Labour
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(b) Book Value of Sum of book value lying in Capital Figure should agree with the
Discarded Assets Block Register in respect of items amount appeared under
sold/discarded as on the date of sale cost W.0.01/00050/00
transaction.
Note - Amount shown against 4(D) (a) & 4(D)(b) should agree with the amount appeared under
cost W.O. No. 01/00050/00
(F) Losses: Amount appeared in PSA Amount should agree with
(a) Surplus Stores Against PSA Issue code 76 losses
- do -77
(b) Obsolete -do- 78 & 79
Stores
(c) Waste & Scrap -do- 70 to 74
(d) Loss of -do- 68 to 69
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CREDIT ITEMS
(i) Rent & Rates Amount compiled in Manufacturing Figure should agree
Recoverable A/c Statt. B. Amount should also be with Cr. item of OH
booked under Cost W.O. Exp. A/c in) principal
01/00125/00 Ledger.
(ii) Elec. & Water Charges Amount compiled in Manufacturing -do-
recoverable A/c Statt. B. Amount should also be
booked under Cost W.O.
02/00117/00
(iii) Unclaimed Wages AS intimated by Fy. Management -do-
Lapsed Amount to be booked under W.O.
01/00140/00
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Deptt. Stores utilized on Sum of process and Foundry Fig. Should agree
Indirect work orders Materials booked under'01' with the amount
2 and '02' series W.Os appeared posted against Dr.
against class of cost 22, 28 item of Misc. charges
etc. A/c of Principal
Ledger.
3 Work-in-progress as on 31St Sum of WIP value worked by LAO Fig. Should agree
March for all the Cost Cards inclusive ofwith the closing WIP
process/Foundry WIP. Fig. Should value shown in work-
agree with the sum total of semi in-progress A/c of
Statt. Prepared by Fy and priced byprincipal ledger.
LAO.
4 Under absorbed fixed Excess of leviable FOH over levied Amount should be
charges amount. agreed with the
summary of IE Statt.
(01 series).
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2.5.3 (c) Post Payment Week Activity: - During this week transaction
details for SARS & Cost PM are captured, validated and processed.
Different master like, Demand Master, History Master are updated
during this period. Outputs generated during this period are recovery
schedule, supplementary payment bills (not related to current wage
period), and generation of different MIS.
2.6 Validation Checks are provided in two different stages. In the data
entry screen validation checks are provided for each field and in case of
any invalid entry the cursor is not allowed to proceed with out proper
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2.9 In the manual system many control audit was not feasible because
of shortage of manpower. As machine has now taken care of the major
strain of calculation the available manpower can now be directed
towards management audit i.e. necessity audit or adequacy audit. As the
package is now standardized necessary system audit package can be
developed.
2.10.1 DO’s:-
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SUMMARY
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SELFASSESSMENT QUIZ
There are I5 Questions carrying equal marks. One mark will also be
deducted for each wrong answer.
Total 30 Marks
A B C D
Quantity of raw Required hours Ledger Folio 10% rejection
material for Trade/Grade No. of the allowed in the
required wise in each material man hour
operation
A B C D
Monthly Fortnightly Quarterly Half-yearly
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A B C D E
90 89 04 02 40
A B C D E
Material SVC Transfer Voucher Labour Component
Abstract Abstract Abstract Abstract
Q10. From the following data which amount represent the levied Fixed
Overhead of the Product:
A B C D
5,000/- 10,000/- 15,000/- 20,000/-
Q11. From the following data which one represents abnormal rejected
quantity?
A B C D
5 10 15 20
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Q12. From the following data select the correct answer for the Unit
Cost of Production of an article manufactured in an Ordnance
Factory.
A B C D
Rs. 129.50 Rs. 130.00 Rs. 128.50 Rs. 127.50
A B C D
Pay & Superannuation Transportation Store purchase
Allowances of Charges Charges
Industrial incurred
Employees
Q14. Which item of expenditure does not show in the Debit Side of
"Production Account" of the Factory?
A B C D E F G
Direct Transportation Work in Direct Cost of Superannu- Over
Labour Charges Progress Stores Rejectio ation Absorbed
as on l" n (KOP) Charges VOH
April
Q15. Which item of expenditure does not show in the Credit Side of
"Finished Stock Account" of the Factory?
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A B C D E F
Issues to Finished Cost of Issues to Issues Issues to
Army Semi as Production other Sister to MES Navy
on31" Fys.
March
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ANSWERS TO QUIZ
ASSESS YOURSELF
THE END
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