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MATERIAL COST Material cost is a first and probably the most important element of cost. In case of some specific types of industries, say cement, sugar, chemical, iron, fast-food and steel the material cost forms a very significant portion of the overall cost of production. The term material refers to all commodities which are consumed in the production process. The materials which can be consumed in the production process can be basically classified as: Direct material Indirect material

The movement of material may involve the following stages: : 

The movement of material may involve the following stages: 1.Procurement of material 2.Storing the material till it is required for consumption 3.Issue of material for consumption

Constituents of Material Cost : 

Constituents of Material Cost 1.INVOICE PRICE – It is the price of material calculated at the agreed rate subject to deduction of trade discount. 2.EXCISE DUTY, SALES TAX, OCTROI etc.-These are the levies made by the government on production or sales. So, these are include in the cost of materials purchased. 3.FRIGHT, INSURANCE etc.-Cost of bringing the material from supplier’s end, when borne by the buyer, are included in the cost of material. Thus , carriage inward, insurance cost on inward goods is included in the cost of material. 4.PACKING COST-If packing cost is charged, in addition to the invoice price, such cost is a part of the cost of materials. When material are delivered in returnable packages which are charged to buyer and credit is given to the buyer at a lower rate on return, the different between the rate charged and the rate credited mean hire charge to included in the cost of material. 5.CASH DISCOUNT- It refer to the deductions available in respect of invoice value, if payment can be made within the time prescribed


INTRODUCTION OF MC DONALD McDonald’s Corporation grew from a single drive-in restaurant in San Bernardino, California, in 1948, to the largest food-service organization in the world. McDonald’s owned $13 billion of the $93 billion fast-food . Introduction of the "Speeded Service System" in 1948 established the principles of the modern fast-food. McDMcDonald's India opened its first family restaurant at Basant Lok in Oct, 1996. McDonald’s has 132 restaurants in India of which 79 are in North & East India and 53 in West & South India Donald's operates over 31,000 restaurants worldwide, employing more than 1.5 million people.

Importance of material management in Mc donalds : 

Importance of material management in Mc donalds 1. The amount spent on materials is higher than other inputs. 2. Materials offer considerable scope for reducing cost and improving profit 3. Materials add value to product. 4. Quality of end product depends on materials 5. The efficiency of any organization depends upon the availability of right materials, in right quantity, at right time and at right price.

Functions of material management in Mc Donald : 

Functions of material management in Mc Donald 1.Materials planning and programming 2.Raw material purchase 3.Receiving, store keeping and warehousing 4.Issuing of material 5.Inventory control 6.Transportation of materials 7.Vendor development 8.Vendor rating 9.Disposal of scrap and surpluses

Focus of Mc Donald : 

Focus of Mc Donald To procure right materials In Right quantity Of Right quality At Right time From right sources At Right prices ---5 R’s of purchasing

Primary objectives of Mc donalds : 

Primary objectives of Mc donalds 1.Buying the best item at the lowest cost 2.Reduction in inventory cost and high inventory turnover 3.Maintaining the flow of production 4.Maintaining the consistency of quality 5.Cordial relationship with suppliers 6.Maintaining good records

Advantages enjoyed by Mc Donald after implying material management : 

Advantages enjoyed by Mc Donald after implying material management 1. lower material cost 2. control of indirect cost (such as material movement) 3. risk of inventory loss minimized 4. control over manufacturing cycle 5. improvement in delivery of the product