अनुक्रम (Contents)
Meaning of Obsolete Materials or Obsolescence of Materials
Obsolete Material refers to those materials which are no longer required for production either due to change in the design of the finished products for which they have been used or due to the fall in the demand for the finished product arising from the change of fashion.
Causes for Obsolescence of Material
The main causes for obsolescence or Obsolete Material are as follows:
1. The failure on the part of the production control department to inform the purchase department of any contemplated change in the design of the product.
2. Absence of standardization.
3. Non-maintenance of separate register of obsolete materials.
4. Carelessness on the part of the purchasing manager in purchasing materials which are no longer required.
5. The failure on the part of the stock-keeper to keep the purchasing department informed regularly about the slow moving items of materials.
6. The failure of the purchasing department to cancel the outstanding orders for materials which are no longer required for production.
7. The failure on the part of the sales department to inform the production planning department and the purchasing department about the change of fashion and the resulting fall in the demand for finished products for which the obsolete materials are used.
Control of Loss Arising From Obsolescence of Materials
The loss arising from obsolescence of materials cannot be avoided. But they can certain be controlled or minimized, and for this the following measures can be followed:
1. The production control department should bring to the notice of all the concerned personnel about the changes contemplated in the design of the finished product.
2. When any change is contemplated in the design of the product or when there is the emergence of better substitute materials, the purchasing manager should take the necessary steps to cancel the outstanding order for the obsolete materials.
3. The store-keeper should send regular report of slow moving materials to the purchasing department, the production department and the production control department.
4. A Separate register should be maintained for obsolete materials to provide up-to-date information on such materials.
5. Wherever possible, the obsolete materials should be used within the factory for some other work order.
6. If the obsolete materials cannot be used within the factory for some other work order, they should be scrapped and sold.
7. If the obsolete materials do not command any scrap value, they should be discarded.
Treatment of Obsolete Materials
The losses arising from the scrapping of obsolete materials should be treated as abnormal losses, and as abnormal losses, they should be debited to costing Profit and Loss Account.
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