The materials consumption report is a document used in the manufacturing process to summarise the items used over the course of a given accounting period. To put it in more simple words, the materials consumption report keeps track of how much raw materials and commodities in the process are utilised to make products over time, such as a week, month, or quarter.
Companies with a consistent manufacturing line frequently prefer to use this report than using a materials procurement form. However, both approaches accomplish the same goal. They keep track of how much raw inventory was used in the manufacturing process so that the storage manager can acquire more or deliver existing inventory to the production line. The cost of materials consumed in production is also assigned accordingly, using the consumption report. This is accomplished by transferring the cost of the raw materials utilised to the new cost of the goods in the process via a journal entry.
What is Material Consumption Summary
Let us consider a hypothetical example to understand what is material consumption summary. The cost of a steel bar is recorded in a raw materials account when a factory procures it. The steel bar is stored in storage until it is required by the production process. Steel is transported to the assembly line once a materials consumption report or materials demand form is delivered to the storage manager. The whole cost or a fraction of the overall cost is allocated to the newly generated items in the process, depending on how much of the stock is utilised.
After that, a material consumption report is utilised to indicate how much raw material is used to make the finished product. This process repeats itself over and over again. It might happen multiple times each hour, depending on the organisation. Take, for example, the Pepsi Bottle Company. Their bottles are made 24 hours a day, seven days a week.
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Material Consumption Summary in Tally
Material Consumption Summary is a godown-by-godown summary that shows how much stock has been consumed for a specific project or task.
Generation of Material Consumption Summary Report:
Given below are the various steps involved to generate a report of material consumption:
- Go to Gateway of Tally> Display> Statement of Inventory> Job Work Analysis and press Enter in the field consumption to drill down.
The same has been displayed in the below images.
How can we configure material consumption summary:
Press F12 for configuration.
You need to enable the following options:
· Show Goods Inwards-Yes
· Show Goods Inwards in detail-Yes
· Show consumption-Yes
· Show goods consumption in detail-Yes
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Detailed Material Consumption Summary Report:
The detailed material consumption summary report is shown in the following image:
The following are the details included in the Material Consumption Summary:
Inwards:
Purchase: The value of the materials consumed in the underlying project is reflected here
Manufacturing Journal: Under Inwards, the value of materials created by sending Manufacturing Journal voucher tagging to the relevant godown is displayed.
Inter Project Transfer: This shows the value of the transfer entry created by using the ‘Class’ established for ‘Stock Journal’ and tagging to the relevant godown.
Other Transfers: Transfers other than above which are done by NOT using the Transfer Class created for Stock Journal is shown here
Consumption:
Cost of Sales: It is the number of products sold multiplied by the cost of purchase. This is where the value of sales reported in an item invoice is shown.
Job Consumption: The value of the entries created for Stock Journal using the ‘Consumption Class’ is presented here.
Outwards:
Manufacturing Journal: The materials that are consumed or used in the job or the project are shown here. They are shown through the manufacturing journal voucher entry.
Inter Project Transfer: This shows the value of the transfer entry created by using the ‘Class’ established for ‘Stock Journal’ and tagging to the relevant godown.
Other Transfers: Transfers other than above which are done by NOT using the Transfer Class created for Stock Journal is shown here
Closing Stock: It is determined using the costing method. It is given by the following formula-
Opening value+Inwards-Consumption-Other Transfers
Material Consumption Stock Summary:
The material consumption stock summary can be viewed by clicking enter on the material consumption summary. When we drill down further the Godown Voucher screen shows. The same has been shown in the images below:
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Total Material Consumption of all jobs:
For viewing the total material consumption of all the jobs the button auto column is available. Click on N: Auto Column. In repeat, using the job/project needs to be selected. In the show total column yes needs to be selected. In the option, Show Total C, you have to select ‘yes’.
The material consumption summary is shown in the image below:
For selecting another project, click N: New Column.
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Conclusion:
The material consumption report is an important report as it informs about the actual material consumed in making the finished product. The article has talked in detail about how a material consumption report can be generated in tally along with the details of the components of the report as well as the various other features of the report.