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00:00Do you have a question on what I've said so far?
00:05No.
00:06Okay.
00:07So, the next one is operating the store.
00:17The next one is operating the store.
00:20Now, for operating the store, we have A, receiving and accepting or rejecting the items ordered,
00:27holding or keeping the items until they are used, and then issuing out the items for you.
00:34So, we have three things when operating the store.
00:36You already know what a store is.
00:38Now, when they say operating the store, what they mean is that we are managing the materials after they have
00:45been ordered.
00:47Operating the store means managing the materials after you have ordered them from your supplier.
00:53Now, the first thing is receiving and accepting or rejecting the items that have been ordered.
00:59So, when the materials arrive, okay, the store will start checking them to see which is good, which is not
01:07good.
01:08So, if they are correct, maybe they gave you 4x4 instead of 5x5.
01:13Oh, sorry.
01:15If they are correct, maybe you wanted 5x5 and they gave you 5x5, the quality is good.
01:20Okay?
01:21So, if they are correct and in good condition, the store is going to accept them and keep them.
01:27But if they are wrong or the materials are damaged, they will reject the order and say,
01:35oh yeah, please, kindly, we don't need the order.
01:39The order is not what we got.
01:43It's not what we ordered.
01:44We are rejecting this order.
01:46Now, the next thing is either we hold or keep the items until they are used.
01:52So, now, the store will keep the materials safely until when needed.
01:59The raw materials will keep it in the store until when it is being needed.
02:03Okay?
02:04Now, the next one is issuing out the items for use.
02:09Now, when the production, okay, I'm sorry, when you say issuing out items for use.
02:15So, this is when the production department needs material.
02:20Production department is those that are, you know, making the product.
02:23So, they're like, oh, okay, we need like, you know, 40 raw materials, 40 materials.
02:31You know, immediately the production department needs materials.
02:37The store is going to give them out so that they can be able to use it.
02:43So, that is what this operating the store means.
02:47Now, the list is stock control.
02:50Now, the stock control, there is recording the stock, checking the stock, planning replenishment of the stock, and valuation of
03:02stock.
03:03Now, when looking about stock control, what they are trying to say is that they are keeping track of the
03:09materials in the stock.
03:12Keeping track of the materials in the stock.
03:14Now, the first one is recording the stock, which is keeping records of what comes into the stock and what
03:23goes out of the stock.
03:25Now, the next one is checking the stock.
03:27This is physically checking the materials to make sure, you know, the actual quantity agrees with the record.
03:37You cannot have a record now of 20 wood, and then you go to the store, and then you see
03:4250 wood.
03:43So, you have to physically go and check the stock, the materials, to make sure it agrees with whatever you
03:49have on your paper.
03:51Now, the next one, which is planning replenishment of stock.
03:55Now, this is knowing when to buy more materials before the stock finishes.
04:03You need to know when to buy more materials to be able to know, you're able to get, you're able
04:09to know when to buy more materials.
04:11So, that you don't just work upon money and, like, the woods are finished.
04:16And you put in that wood urgently for some, you know, for some corporations.
04:20So, you need to be what?
04:21You need to keep that in check.
04:23Now, the other one, which is the last, is valuation of stock.
04:26Now, valuation of stock is determining, you're going to be determining the costs of the materials in the stock.
04:38Let's, for example, now you have 70 wood in the store.
04:42You're supposed to determine how much is that 70 wood.
04:45It's 100,000 euro.
04:47So, that means what is in store is 100,000 euro.
04:49You need to determine the cost of the materials you have in the stock.
04:56So, if one is missing or 20 is missing, you will know how much is missing.
05:01Okay?
05:02And, okay, so the summarized overview of the stores is the purchasing function, which is the same thing here.
05:11It's the same thing.
05:13Identifying this thing.
05:15They say it here as requisition of stocks, supplier analysis and selection.
05:21When you're selecting the, you know, the suppliers.
05:25Then when you're interested in suppliers, you negotiate with suppliers, and then you place your order.
05:28For the operating of the store, you receive receipts of the orders and materials handling, where you handle the stock,
05:35and then you issue the stock.
05:37So, all these are still the same thing.
05:40And this is the end of that.
05:43So, the next one is talking about the factors that facilitate effective materials cost control.
05:50Then you talk about the valuation of stock.
05:54You know, I tell you, you know, when you have to start, you have to determine the cost of the
06:01materials in the stock.
06:02So, there are a lot of ways to be able to determine the cost of the materials in the stock.
06:07I don't know.
06:11Yeah, we have a lot, but not that much.
06:14So, let's go on to what we are supposed to have.
06:19Before I move on, please.
06:21So, let's continue from where we are stuck at.
06:24So, factors that facilitate effective material cost control.
06:28Now, the following factors are important for an effective material control system.
06:34And the first one is a budget of material usage and purchases.
06:38Before I move on, let me quickly explain.
06:41Now, these factors that facilitate effective material cost, okay, what they do is they explain what a company needs to
06:51control the cost of materials properly.
07:01Now, the first one is a budget of material purchase.
07:20Now, in talking about a budget of material usage and purchase, this is when the company plan or I would
07:35say when the company prepare a plan, okay,
07:39that is showing us how much the material, how would I put it, like how much materials we are going
07:49to use, okay, and then how much materials we are going to buy.
07:53I repeat.
07:54For the budget of materials usage and purchase, this is when the company or the company should either plan, okay,
08:03and show us.
08:04So, they will plan and then they will show the management how much materials they are expecting to use and
08:12how much they are going to buy.
08:14Now, the, as you can see, this is a budget.
08:18Now, this budget that I just explained now, it helps to prevent buying too much material and too little material.
08:28Now, the next one is the handling of purchases by competent and qualified personnel.
08:37One, this is when the people responsible for buying materials should have the right knowledge and skills.
08:45You cannot call somebody that is a cleaner to come and be buying, you know, the materials to be able
08:52to, how do I say, the materials to be able to either manufacture a perfume or something.
08:59Maybe buy for a generator.
09:02You can't call someone that is a cleaner to come and buy materials from or give you an idea on
09:07what you need to build your machine.
09:10Okay, someone who is, who has the right knowledge and who has the right skill, okay, should be responsible for
09:17buying the materials and, yes, for supposed to be, how I put this, supposed to be the one that would
09:26buy the materials, responsible.
09:28Now, the next one, now, you know that the reason, the reason why the responsible person, sorry, the one with
09:36the idea and the one, the one with the right knowledge and right skills to buy the materials because they
09:44might choose good qualities, not they might, they will choose good qualities, okay, at little, at a reasonable price.
09:52Now, the next one is availability of sufficient and effective storage facilities.
09:59Now, this is when the company should have a proper place to store materials safely.
10:09As I, you see, some companies, they have magazine.
10:11I don't know how to call it here.
10:14You don't call it magazine, right?
10:16I think, whereby they store, you know, their, their materials at.
10:23So, a company should be able to have a very good, proper place to be able to store their materials
10:30safely.
10:31Now, one, whereby they will start seeing termites and all these things that will now make their, their, their, their,
10:36their materials go bad.
10:37So, this, this availability of sufficient and effective storage facility, it prevents materials from being damaged or from being lost
10:50or for, or from being wasted, okay?
10:53Now, the next one is effective, an effective classification and coding for materials.
11:00Now, what this is trying to say is, the materials should be properly grouped and given codes and numbers.
11:08You should give them codes, you should give them numbers.
11:10Now, this is, this will make it very, very easy to be able to identify your materials.
11:15So, if you are putting wood in section 288, and someone tell you, oh, where are the wood?
11:20Go to section 288 or go to, um, this, this thing.
11:24So, when you code it, you can be able to go to section 288, maybe it's like a, it's like
11:30a, um, um, uh, a cupboard place.
11:32So, you can be able to see the materials you are looking for.
11:36Now, the next one, which is the last, I don't think, is this the last one?
11:40An effective use of standard form of proper documentation.
11:44Now, this means that the company should use standard forms and documents when materials are purchased, or how many materials
11:56are received, how many materials are stored, how many materials are issued, okay?
12:01They should use proper documents.
12:03They must, you know, document it.
12:05This proper document, it provides proper record, okay?
12:09And reduces mistake.
12:11This effective use of standard form and, um, proper documentation, okay?
12:16It's, make sure they don't make any mistake.
12:21Please, can you be able to see my screen?
12:23Yes, we do.
12:25Okay, so this is a standard form.
12:28As you can see, it's showing the name of the company, the telephone, the address, the email, the admin, the
12:35this, there.
12:36This is a, um, standard form.
12:40The type, identity, interest of a belt.
12:42This, this is a standard form for a company.
12:46This is also another one.
12:48This is a standard form.
12:49This is a standard form of listing, uh, I don't know what sanctions.
12:54This is for sanctions.
12:55We have a standard form for public, uh, publication requirements.
12:59We have, um, standard form.
13:02We have a lot of examples of standard form.
13:05So, if you go to, um, how would I say it?
13:09Um, this is standard form application.
13:12We have the file listing.
13:13We have a lot, depending on the business and what they want to use their standard form to do.
13:19So, this is an example of what a standard form is.
13:22You know what documents are.
13:23So, um, I'm trying to give you an idea so that you don't be, you don't, um, say overstand that.
13:32So, the next one.
13:34Um, so, as I said before that the, um, the standard form provides a proper record and reduces mistake.
13:45Now, the next one is an effective co-coordination among all departments involved in materials handling, e.g. buying, receiving,
14:01storage, and usage.
14:02So, when I'm talking about, when I'm talking about good coordination between departments, it means that all departments involved in
14:09the materials should work together.
14:11So, for example, I said that an effective co-coordination among all departments involved in materials handling, e.g. buying,
14:24receiving, storage.
14:27storage, what does that mean, which I am trying to say?
14:32I was saying that that means that all the departments involved in materials should work together.
14:41So, the departments of purchasing the material, the departments of receiving the material, the departments of storing the material, the
14:48departments of, you know, the product, producing, um, using the material for production, they should all work together.
14:57Now, the, um, the, um, this is that when they all work together and they have good communication, it prevents
15:05delays, it prevents mistakes, it prevents unnecessary purchases.
15:11Now, the next, the least one is the, um, the institution of working internal control system slash audit.
15:20Now, what does this have to do?
15:23This means that the company should have a system of checking and monitoring sales and transactions.
15:31They should have a system that monitors, um, checking and, they should have a system for checking and for monitoring
15:39sales and transactions.
15:41Because this will help to detect errors, it will help to detect theft, it will help to detect fraud, and
15:49it will help to detect, uh, to the, um, the, the, the detect waste.
15:55Now, let me give you a little story.
15:56So, there is this lady, her father works in this company, okay?
16:01And, when the father comes home, at 12 a.m., there's always a transaction that happens on his laptop.
16:11He's not the one, but on his laptop, a transaction happens and the, the, the transaction reduces, um, deducts 100
16:19,000 nera every 3 a.m., every Tuesday.
16:24Okay?
16:25So, now, they held the father accountable because the, the, the, the company thought the father has been stealing.
16:31But, at that time whereby the, the, the, the transaction is happening, the father is always asleep.
16:37How is it possible that, um, the, the transactions happen at that time?
16:43So, the father tried, um, my friend, um, the girl's father tried to, tried to investigate, but could not be
16:50able to find out the, the, the, the, the, the, the, the, the thief.
16:56Now, as you can see, before they can detect, the detect that, the company have an audit.
17:02So, as you can see, immediately there was a fraud, the company was able to detect theft and fraud.
17:09Only for us, for, only for them to find out that the, the, the, the headquarters of that company had
17:16a access to the girl's father's, um, um, the password and everything.
17:22So, they were the one removing the money, you know, to blame it on the guy.
17:27And, they, eventually, you know, they sacked the person that, that did that.
17:30But, for them to identify that, that means the, the, the company had a working internal control system, which is
17:37an, or an audit.
17:38What I was able to detect, I'm able to, so, if your company does not have that, you know, there
17:43will be lots of, there will be lots of errors, there will be lots of, um, of fraud.
17:48So, with that being said, we'll be going to valuation of stock.
17:58Please, do you understand what I just explained now, before I move on?
18:02Okay.
18:02So, we move on to valuation of stock.
18:04Now, there is usually a challenge in ascertaining the price by which stock should be issued out of the stock,
18:11because they are usually purchased at varying prices, from time to time.
18:18There are several methods that could be employed to price issues.
18:23Now, let me talk, um, valuation of stock.
18:28So, this is the, um, the problem.
18:32The problem that is a company's, uh, sorry, I would like to do this.
18:38The problem is that, okay, a company may buy the same material at a different price and at a different
18:46time.
18:47Okay?
18:47So, what I'm trying to explain, let's say, for example, now, January 10, um, the company buy, like, 10 units,
18:55and then 10 units, one unit is 100 nera, and then they bought 10 units.
19:00If one unit is 100 nera, 10 units would be how much?
19:03If one unit is 100 nera, and the company buys 10 units, how much would that be?
19:09That's 1,000.
19:10Thank you very much.
19:11Now, during, uh, February, the company buy that same product, but this time around, one unit is 120 nera, and
19:21they bought 10 units.
19:22How much would be 10 units?
19:251,200.
19:27Thank you very much.
19:28Now, as you can see, if the company, um, wants to start writing the 10 units of the product, will
19:35there be, which price are they going to use?
19:37Will they use the one of 1,200 nera or 1,000 nera?
19:40So, as you can see, um, that is why company needs, um, methods, okay, to value and price their stock,
19:50their stock, or their materials.
19:52Because, you know, they can buy a material, the same material you can buy, you can go and buy on
19:56January now.
19:57By February now, the price has changed.
19:59So, which part are they, which, when you want to go and buy again, which price are you going to
20:03follow?
20:03So, this is why we need methods to be, to value our stock.
20:08Now, the first method is first in, first out, which is called FIFO.
20:14FIFO.
20:15First in, first out.
20:17Now, first in, first out, this is the materials bought first, okay?
20:24I repeat.
20:25When you say first in, first out, this is when the materials bought first are assumed to be used first.
20:33I repeat.
20:34The materials bought first are assumed to be used first.
20:39That means the materials you got, they assume that you have already bought, you've already used that first.
20:43You've used that materials first.
20:45Now, last in, first out, which is FIFO.
20:48FIFO is the materials bought last are assumed to be used first.
20:54For example, when you buy so many materials, then the last material you bought is what you started to use.
21:00The first in, first out is the first material you bought is what you started to use first.
21:05The last in, first out is when you buy your materials, the last material or the last product that you
21:10bought, that's what you started using before you started using the other product.
21:14Okay, so please, I hope, please, do you understand the first in, first out and the last in, first out?
21:20Yes, we do.
21:22Now, the next one is...
21:24FIFO.
21:26Please, do you have a question?
21:29Okay.
21:30Okay, contribution to that LIFO.
21:32Okay, yes, please add your contribution.
21:35Okay, so that last in, first out is sometimes product that's are close to expiry.
21:43So, when they, even though they are coming in last, they are expected to be used first.
21:50They are assumed to be used first.
21:54They are assumed, yes.
21:55Yes, because they are close to expiry.
21:58Thank you very much.
21:59Yes, that's true.
21:59You might buy something and then it does, that's, that's the expiring listing.
22:03You will have to use that one first before you start using the other ones that you have.
22:07Thanks for that.
22:08Yes.
22:09Now, the next one is simple average method, which is called SAM.
22:14Now, simple average method, the prices, okay, these are prices that are added together and then divided by the number
22:24of prices.
22:25I use myself again.
22:26Simple average method, okay, they are, these are the prices.
22:31So, how would I put this?
22:34Let me, let me be very slow, what I'm trying to explain.
22:37The simple average method, okay.
22:44They are the prices that are added together and then they are divided by the number of prices.
22:57This thing, let me, let me, let me see if I can be able to give you an example.
23:03Sorry, let me be able to turn my camera.
23:05Oh, sorry, I'm not, let me join.
23:08Okay.
23:09So, we have here simple, simple, simple what?
23:14Simple average method.
23:21So, the simple average method I said, I said it is, um, it is the price, when the prices are
23:31added together and divided by the numbers of prices.
23:35So, let me say, for example, now, a company bought materials at three different prices.
23:40A company, okay, materials at three different prices.
23:52So, let me say, the first, um, this thing, the first material, sorry, the material, the first time they got
24:01the material, let's say the first purchase, because it's the same material they bought.
24:06So, um, the first purchase, when they bought the material, it was 100 naira.
24:10The second time they bought that material again, then the second purchase, it became 120 naira.
24:17Now, the third time they went to go and buy that same material again, it became 140 naira.
24:26So, now, for simple average method, you will add all the prices together and divide it by the number of
24:33times you bought that same material.
24:35So, how many times, how many, all the prices was, is 100, 120, 140.
24:41So, you have 100 plus 120 plus 140.
24:46And how many times do we buy the material?
24:48We bought the material?
24:49Three times.
24:50Three times.
24:51So, 100 plus 120 will give me what?
24:55220.
24:56220 plus 140.
24:58360.
25:00360.
25:00That would be 360 divided by 3.
25:043, yeah, 1, 3 is 360.
25:05We have 120.
25:06That is 120.
25:08So, therefore, the material will be valued, the material that you got will be valued at 120 naira.
25:15So, it will be valued at 120 naira.
25:18So, that's how to do a simple, this thing.
25:20So, the, uh, let me repeat myself again.
25:22So, the prices are added together and then they are divided by the numbers, the number of prices.
25:28So, if you bought that material like six times, okay, for maybe different prices, the times you bought that material,
25:36you will divide it and so you will add the time, the, um, price you bought the materials and then
25:43divide it by how many times you got that material.
25:45And then you have this 120 and then this, um, this 120 becomes the simple average price.
25:53So, this, you will say is, if you want to buy one unit, it will be 120.
25:59Okay?
26:00So, the material will be valued at 120 per, maybe, per unit.
26:06That's how it's going to be.
26:08Please, do you understand?
26:10As you can see, in this place, the, they are in simple average method, the quantity purchase is ignored.
26:17The quantity purchase is ignored.
26:20So, for some, the formula is, you will add all the prices and then you divide it by the number
26:36of prices.
26:39So, if you got, if you bought, if you, if you, if you got, um, uh, if a material, you
26:46got it six times, that's the number of prices you got that material.
26:51I do not explain what I want to explain now.
26:54If you, just like this, now, the, the, all the prices here is one, two, three, you add it together
26:59and the numbers of prices is one, two, three.
27:01The number, the number of times you went to go and buy that same material or different material is three
27:06times.
27:06That would be, so, whatever you want to do, just look at the number of times you got that material
27:12and divide it by all the price and add all the prices.
27:14And then, you do a division.
27:17That is for, um, simple average method.
27:20Please, do you understand what I just explained?
27:23Please, if you don't understand, let me know.
27:26Let me know.
27:27Okay, so, I guess we all understand.
27:28Now, the next one, the next one is weighted average method, which is one.
27:36Now, for the weighted average method, the average price is calculated.
27:42So, how do you get your average price?
27:45Your average price is calculated while considering both, uh, while considering the quantities bought at each price.
27:53Now, in this time around, you are considering the quantities you got for the, for the sum, this thing.
27:59We don't know if maybe the first time we went to go and buy it, we got maybe, um, six
28:04yards for hundred naira.
28:05We don't know.
28:06For the second price, we don't know if we got only two yards for 120.
28:10But for weighted price, weighted average method, they will, they want to, they are going to consider what?
28:16The quantity that you got first.
28:19The first price you bought it for.
28:20What was the quantity?
28:21The second price that you went to go and buy, what was the quantity of that material?
28:25The third time you went to go and buy that, um, um, material, what was the quantity you got?
28:30Okay, so, for the weighted average method, the average price is calculated while considering the quantities bought at each price.
28:40So, I will see if I can be able to do a, an example on that so that you can
28:46be able to understand that.
28:48Let me first for take a picture of what is on the board.
28:52So, I said that in WAM, that we consider something.
28:55We consider both the price and quantity.
29:03Okay, we consider both the price and quantity that is being bought.
29:08So, let's say, for example, let's have here quantity.
29:13Let's have here price.
29:15Let's say we got 10 units of steel.
29:19No, not steel.
29:20Let's say we got 10 units of wood.
29:21Okay, for 100 Naira.
29:24Very simple.
29:25And then we got 20 units of wood for 120 Naira.
29:34Now, what you are going to do, first of all.
29:36So, for one, what you are going to do is, you are going to multiply your price and your, your
29:41price, your quantity, or your quantity to your price.
29:44Okay, you multiply your quantity and your price.
29:47So, let me write that, um, multiply quantity and your price.
29:55So, the first one is 10 times 100, which will give me what?
30:021000.
30:031000.
30:05Now, 20 times 120.
30:07120.
30:08120.
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