Cost audit for materials covers

(A) Goods inward procedure

(B) Methods of calculating standard cost variance

(C) Classification of overhead

(D) Accounting for scrap, wastage, materials transfers

(E) Accounting treatment of under or over absorption

Choose the most appropriate answer from the options given below:

Correct option is A

Cost audit for materials primarily involves goods inward procedures and accounting for scrap, wastage, and material transfers to ensure proper material usage and cost control.
Information Booster:
· Material cost audit ensures efficiency in material procurement and usage.
· Goods inward procedure includes material receipt, inspection, and documentation.
· Scrap and wastage accounting helps in reducing material losses.
· Overhead classification relates to factory and administrative expenses, not directly to material audit.
Additional Knowledge:
· Goods inward procedure: Ensures that materials received meet quality and quantity standards.
· Scrap and wastage accounting: Helps track and minimize material loss.
· Standard cost variance methods: Used for performance evaluation, not material auditing.
· Overhead classification: Part of cost accounting but not specific to material audits.