Material Cost Question:

Following are the steps in procurement of material:

Purchase Requisition is an indication to the purchase department to purchase certain material required for the production. Following particulars appear in the purchase requisition

-Material to be purchased
-When it is required
-How much to be purchased
-Selection of Source of Supply
-Single Tender
-Limited Tender
-Open Tender
-Global Tender
-Purchase Order
-Description of Materials to be supplied
-Quantity to be supplied
-Cash and trade discount Rates at which materials are supplied
-Additional charges e.g. Excise duty, Sales tax, packing charges, insurance Instructions in respect of delivery
-Guarantee clause
-Inspection clause
-Method of settlement of disputes
-Terms of payment Receipt and Inspection
-After the receipt of materials, inspection of the material is done. Inspection of materials means that the quantity actually received is compared with the quantity ordered; also the quality of the material is inspected.

Invoice received from the supplier is compared along with the purchase order, goods received note and inspection note.