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        Accounting for material costs
　　Example:material control account
　　Bossy Co manafactures a single product and has the following transactions for material during a particular period:
　　(1)Raw materials of $500,000 were purchased on credit from a supplier(Timid Co).
　　(2)Raw materials costing $10,000 were returned to the same supplier due to defects.
　　(3)The total stores requisitions for direct material for the period were $40,000.
　　(4)Total issues for indirect materials during the period were $15,000.
　　(5)$5,000 of unused material was returned to stores from production.
　　Required
　　Prepare the material control account for the period,showing clearly how each transaction is treated.
　　Solution
　　Note on transactions:
　　(1)All raw material purchases are entered into the material control account as a debit entry-the corresponding credit goes to the payables control account.
　　(2)Any returns of material are treated in the opposite way to purchases of material.
　　(3)Direct material is directly related to production,The material control account will be reduced(credited) by the amount of material being issued.On-going production is represented by a Work in Progress account in the ledger system.
　　(4)Indirect materials are not directly related to production so will not affect the Work in Progress account,Such materials are classed as factory overheads and will therefore be entered into a Factory Overheads account.
　　(5)The unused material returned to stores(inventory)will increase materials inventory and will therefore be a debit entry in the material control account.As it is being returned from production,the corresponding credit entry will be in the Work in Progress account.
　　MATERIAL CONTROL ACCOUNT
　                                                             　$                                                                         $
　　(1)Payables control account    500,000       (2)Payables control account     10,000
　　(2)Work in Progress account      5,000       (3)Work in Progress account    400,000
　　(4)Factory Overheads account    15,000
　　Closing inventory (bal.figure)  80,000
　　505,000                                       505,000