Purchase of Supplies, Services, and Repairs

Purchase of Supplies, Services, and Repairs:

Learning Objective of the article:

  1. Explain the procedure of Purchasing supplies, services and repairs.

The procedure followed in purchasing productive materials should apply to all departments and divisions of a business. Purchase requisitions, purchase orders, and receiving reports are appropriate for accounting department supplies and equipment, the company cafeteria, the first aid unit, the treasurers office, the building service department, and the public relations, personnel, sales and engineering departments, as well as all other departments. If, for example, the accounting department needs new forms printed, a requisition should be sent to the purchasing department in the usual manner, and a purchase order should be prepared and sent to the printer.

In the case of magazine subscriptions, trade and professional associations memberships for company officials, and similar services, the official or department head may send in a requisition in a usual manner. A requisition, an order, and an invoice for all goods and services purchased are a necessity in properly controlling purchases.

Repair contracts on an annual basis for typewriters, calculators, electronic data processing (EDP) equipment, and some types of factory equipment may be requisitioned and ordered in the usual manner. In other cases, a department head or other employee may telephone for service and shortly thereafter may have a machine repaired and back in operation. In such cases, the purchasing agent issues a so-called blanket purchase order that amounts to approval of all repair and service costs of a specific type without knowing the actual amount charged . When the repair bill is received, the invoice clerk checks the amount of the bill with the head of the department where the repairs took place and then approves the invoices for payment.

You may also be interested in other useful articles from “controlling and costing materials” chapter:

  1. Purchases of productive material
  2. Purchases of supplies, services, and repairs
  3. Materials purchasing forms
  4. Receiving materials
  5. Invoice approval and data processing
  6. Correcting invoices
  7. Electronic data processing (EDP)  for materials received and issued
  8. Cost of acquiring materials
  9. Storage and use of materials
  10. Issuing and costing materials into production
  11. Materials ledger card – perpetual inventory
  12. First-in-First-Out (FIFO) Costing Method
  13. Average Costing Method
  14. Last-in-First-Out (LIFO) Costing Method
  15. Other Methods-Month end average cost, last purchase price or market price at date of issue, and standard cost
  16. Inventory valuation at cost or market whichever is lower
  17. American Institute of Certified Public Accountant (AICPA) cost or market rules
  18. Adjustments for departures from the costing method used
  19. Inventory pricing and interim financial reporting
  20. Transfer of materials cost to finished production
  21. Physical inventory
  22. Adjusting Materials Ledger Cards and Accounts to Conform to Inventory Accounts
  23. Scrap and waste
  24. Spoiled goods
  25. Defective work
  26. Discussion Questions and Answers about Controlling and Costing Materials


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