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LIMITED DEPARTMENTAL COMPETENCY

EXAMINATION
FOR THE POST OF CM/NT/OTS
PAPER GENERAL KNOWLEDGE
01 FIVE YEAR PLAN
02 CONSTITUTION OF INDIA
03 FACTORY ACT
04 WORKMAN COMPENSATION ACT
05 PAYMENT OF WAGES ACT
06 INDUSTRIAL DISPUTE ACT
07 POPULATION EDUCATIONS AND FAMILY PLANNING
08 ENERGY CONSERVATION
09 CURRENT AFFAIRS
10 ENVIRONMENTAL AND POLLUTION CONTROL

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Limited Departmental Competitive Examination

for the post of Chargeman Gr.II (Tech & Non-Tech)

Scheme of LDCE for Chargeman Gr.II (Tech & Non-Tech) , circulated vide OFILAJ
letter no. OFILAJ/9029/LDCE/2005 dated 03/08/2005

TECHNICAL

Paper - I General Knowledge ( Marks - 50 )

Paper - II General Engineering and Relevant Technical Subject ( Marks - 100 )

Part. I - General Engineering ( Marks - 25 )
Part. II - Relevant Technical Subject ( Marks - 75 )

Paper - III Factory Accounting and Store Procedure ( Marks - 100 )

NON-TECHNICAL (OTHER THAN STORES)

Paper - I General Knowledge ( Marks - 50 )

Paper - II Labour Accounting and Factory Accounting ( Marks - 100 )

Paper - III Office Procedure and Administration ( Marks - 100 )

Part. I - Office Procedure ( Marks - 25 )
Part. II - Administration ( Marks - 75 )

NON-TECHNICAL (STORES)

Paper - I General Knowledge ( Marks - 50 )

Paper - II Labour Accounting and Factory Accounting ( Marks - 100 )

Paper - III Store Procedure and Material Management ( Marks - 100 )

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LIMITED DEPARTMENTAL COMPETITIVE EXAMINATION
FOR THE POST OF CHARGEMAN Gr.II (NON-TECHNICAL)

SYLLABUS FOR
OFFICE PROCEDURE & ADMINISTRATION
(Subject Code No. 5.00 / 311)
PART I
OFFICE PROCEDURE

5.01 OFFICE ORGANISATION & FUNCTION

Meaning of Office, Purpose & Basic Functions, Office Organisation Basics : Division
of Work & Delegation, Organisation Charts, Span of Management.

5.02 OFFICE LAYOUT & ENVIRONMENT

Office Layout Vs Space Management, Objectives and importance of Office Layout,

Principles of Office Layout. Office Environment : Lighting, Ventilation, Safety
Precautions, Cleanliness & Sanitation.

5.03 RECORDS MANAGEMENT

Meaning, Purpose & Types of Records, Processing Records, Principles of Record

Keeping; Filing; Essentials of a good filing system objectives Centralised Vs
Departmentalised Filing Advantages & Disadvantages of Filing System.
Alphabetical, Subject wise, Numerical, Vertical or Upright Advantages and
Limitation.

INDEXING
Meaning, Objects; Type of Index; Weeding of Records, Record Retention Schedule.

5.04 OFFICE CORRESPONDENCE

Inward & Outward Correspondence, Handling of DAK-receipts, Diarisation, Action

on receipts, Types of Correspondence; Office Notes, Letter of Application,
Appointment Letter of enquiry, D.O. letter, Quotation etc., Circular letter, Office
memorandum, Orders, Official letter, Notification, Communiques, Specimen of each.

5.05 FORM REPORTS & SANCTIONS

Objects & Purpose of Office form, Guidelines for forms design, types of reports and
returns; Purpose & Importance; Financial Sanction; Drafting of Sanction; Principles
& Guidelines, Signing of Sanction lapse, Restrospective effect of Sanction

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PART II

ADMINISTRATION

5.06 GENERAL ADMINISTRATION

Role and Duties of Supervisor : Motivation, Communication, Leadership, Grievance

Handling Mechanism, Delegation, Authority and Responsibility.

5.07 RULES AND PROCEDURES

CCS (Conduct Rules), CCS (CCA) Rules : Types of Penalties, Enquiry Procedure,
Appeal and Review, Classification of Employees : Recruitment Procedures,
Reservation of SC/ST and OBC, Maintenance of Rosters, DPC Procedures, Trade
Tests, Promotion Procedure for IEs and NIEs.

Fixation of Pay : Scale of Pay, Annual Increament, Fixation of Pay on Promotion,

Re-designation, Revision etc., Cash Drill Procedure : Payment of IEs, NIEs and
NGOs., Calculation of elements of Pay.

Leave Rules : Entitlement of IEs and NIEs, LTC/ TA/ DA Rules, GPF Rules :
Entitlement and Procedures for Advances/ Withdrawals. Quarter Allotment Rules,
Eligibility Critria, Retention of Quarters, Eviction Procedures.

Terminal Benefits : Pension, Family Pension, Gratuity, Leave Encashment,

Commutation of Pension, Rules and Entitlement.

5.08 LABOUR WELFARE AND INDUSTRIAL RELATIONS

Works Committee : Constitution, Role and Function, JCM Level : Constitution,

Role & Functions, Right and Liabilities of Recognised Unions, Unfair Labour
practices.

Factories Act : Statutory measures for Welfare, Safety, Health and Working Hours,
Powers of Inspectors of Factories, Duties of Occupier, Rights and Duties of
Workmen,

Workmen Compensation Act : Entitlement and Eligibility for Compensation,

Concept of Accident on duty, Occupational diseases.

5.09 SECURITY

Security Standing Orders, Role of Civilian Security and DSC, Security of Building
and Installations, Vigilance and Surprise Checks, Mustering in and Mustering out
procedures, Check of personnel and Vehicles.
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Doc No. OFILAJ/LDCE/CM II/OP&A. (NT/OTS)/Issue No. 2(2005) Page 1to

FOR THE POST OF CHARGEMAN Gr.II (TECHNICAL)

SYLLABUS FOR
METALLURGICAL ENGINEERING
(Subject Code No. 2.04/224)
--------------------------------------------------------------------------------------------------------

2.04.01 FERROUS METALS

(a) Different types of furnaces such as medium frequesncy. High and normal
frequency Induction furnaces & Electric Arc furnace.

(b) V D and Electro Slag refining.

(c) Cast Irons and their use. S.G. Iron.

(d) Heat Treatment of Steel, Normalising, Annealing, Hardening & Tempering

with reference to Iron-Carbon diagram.

(e) Effect of alloying elements like C, Mn, Si, V, Cr, Ni, W, Mo.

(f) Different types of steel like Structural, High Strength Steel, Ball Bearing,
Non-Shrinking Steel, Hot Working Steel, High Speed Steel, Spring Steel,
Case-Hardening Steel, Tool Steels, Die Steels.

(g) Surface Treatment of Steel like Phophating Galvinising, Chromatising,

Cadmium, Zinc Plating, Anodising

(h) Testing of metal : Non-destructive testing like Ultra-sonic, X-ray, MPT,

Tensile testing, UTS, EL% R of A%, Proof stress, Bend.

(i) Different types of Hardness tests, Brinel, Vickers, Rockwell, Shore.

(j) Impact testing, Izode and charpy.

(k) Analysis of different types of elements like C, Mn, P, S, Si, Ni & Cr.

(l) Metallographic examination and different types of etching reagents (Macro

& Micro both).

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(m) Metal shaping : Hot working of metals like Forging, Rolling Extrusion, Cold
Rolling, Wire Drawing and Deep Drawing, Press working sheet Metal
working.

(n) Foundry technology and different types of sands, Runner, Risers and their
effect.

2.04.02 NON-FERROUS METALS

(a) Copper and its alloys : Melting, working and its heat treatment.

(b) Aluminium and its Alloys its working and heat treatment.

(c) Temperature and its measurement Pyrometry.

(d) Various types of Bearing metals, their use in industry.

(e) Metal joining, Welding, Soldering and Brazing ( TIG / MIG Welding ).

(f) Varios types of defects in Casting, Forging, Extrusion Welding.

--------------------------------------------------------------------------------------------
Doc No. OFILAJ/LDCE/CM II/Met.Engg. (Tech)/Issue No. 2(2005) Page 1 to 2

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LIMITED DEPARTMENTAL COMPETITIVE EXAMINATION

FOR THE POST OF CHARGEMAN Gr.II (TECHNICAL)

SYLLABUS FOR
CHEMICAL ENGINEERING
(Subject Code No. 2.05/225)
--------------------------------------------------------------------------------------------------------

2.05.01 BASIC PRINCIPLES AND CONCEPTS IN CHEMISTRY

Atoms, Molecules, Gas laws, Metals, Non-metals, Aliphatic and Aromatic

compounds, Chemical Kinetics, Chemical thermo-dynamics, Surface chemistry,
Instrumental methods of analysis.

2.05.02 INDUSTRIAL STOICHIOMETRY

Mass Volume relations in chemical reactions in chemical reactions, Molal units,

vapor pressure, solubility and absorption, thermo-chemistry.

2.05.03 MECHANICS OF FLUIDS

Flow of fluids in pipes and channels, viscosity of fluids, fluid heads, Transportation
of fluids.

2.05.04 UNIT OPERATIONS

Evaporation, Crystallisation, Filtration, Distillation, Size reduction and Separation,

Mixing and Conveying, Gas absorption and adsorption, Extraction, Drying, Heat
Transfer, Mass transfer, Humidification and Air conditioning.

2.05.05 TYPICAL INDUSTRIES

Iron and Steel, Fertilisers, Chlor-alkali; Water in industries.

2.05.06 EXPLOSIVES INDUSTRY

Explosives classification, propellants, solid and liquid propellants, pyrotechnics,

basic concepts of ammunition, civil blasting explosives; Safety in manufacture,
handling, storage and transportation of explosives; Statutory requirements and
regulations; Pollution control.

-------------------------------------------------------------------------------------------------

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LIMITED DEPARTMENTAL COMPETITIVE EXAMINATION
FOR THE POST OF CHARGEMAN Gr.II (NON-TECHNICAL)

SYLLABUS FOR
LABOUR ACCOUNTING AND FACTORY ACCOUNTING
(Subject Code No. 8.00 / 331)
--------------------------------------------------------------------------------------------------------

8.01 LABOUR ACCOUNTING

8.01.01 Classification of Labour, Working Hours, Daily Mustering, Checking of Attendance

and Maintenance of Records.

8.01.02 Calculation of Wages, Various elements of Wages, Piece Work Earnings, Idle Time,
Leave Pay, Overtime, Overtime Bonus, Night Shift Bonus, Night Duty Allowance,
Saturday Bonus, DA, CCA, HRA, IR, Incentive Bonus, Injury Pay, Guarantee Pay.

8.01.03 Completion of Muster Rolls, Payment to IEs, Belated and Advance Payments,
Absentee Payments.

8.01.04 Day Work Card, Piece Work Card, Agreement form of Labour.

8.01.05 Financial and Cost Accounting of Labour Charges.

8.01.06 Payment of Workmen under Workmen Compensation Act.

Referencesc:

1. Manual of Cost Accounting in the Ordnance & Ordnance Equipment Factories

----------------------------------------------------------------------------------------------

8.02 FACTORY ACCOUNTING

8.02.01 Production Planning : Extracts, Central Demand, Inter Factory Demands,

Supplementary Work Order Demands, Civil Trade.

8.02.02 Standard Estimate : Labour and Material Estimate, Spot Estimate, Non-Recurring
Rate and Non-Recurring Revisions of the Materials, Pricing of Estimates.

8.02.03 Numbering of Work Orders : Syllabus of Work Order Pt. I & II, Sinificance of
Different Digits of the Work Order Numbers.

8.02.04 Progressing of Warrant, Issue of Warrant, Warrant life, Production Ledger Card and
Cost Card, Drawl of Material / Labour booking against Warrants, Closure of Warrant
and Cast Card, Variance Analysis, Semi Statements, Work-in-Progress.

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8.02.05 Except System of Accounting for components, Accounting for Tools, Process
Costing, Foundry Costing, Timber Costing.

8.02.06 Accounting for Overhead Expenditure : Fixed and Variable Overheads, Shop
Budget Committees, Departmentalisation of Overhead Expenses, Step Ladder
allocation of Service and Mixed Section Expenditure, Fixing of Predetermined
Percentage of VOH & FOH, Under/ Over Absorption of VOH & FOH, Accounting of
R & D Expenditure.

8.02.07 Annual Account Pt. I & II , Quasi Commercial Accounting, Price List, Profit/ Loss
on issue of stores, Productivity Linked Bonus, Single Point Performance Index.

Reference :

1. Manual of Cost Accounting in the Ordnance & Ordnance Equipment Factories.

2. Syllabus of Work Orders Pt. I as amended from time to time.

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LIMITED DEPARTMENTAL COMPETITIVE EXAMINATION

FOR THE POST OF CHARGEMAN Gr.II (NON-TECHNICAL)

SYLLABUS FOR
STORE PROCEDURE AND MATERIAL MANAGEMENT
(Subject Code No. 7.00 / 322)
--------------------------------------------------------------------------------------------------------

7.01 MATERIAL PLANNING

Description of Material to be procured Codification Economic Quantity for

Procurement When to procure Meterial Planning in Ordnance Factories
Computerised Material Planning.

7.02 PROVISIONING PROCEDURE

Ordering Quantity and Lead Time Sources of Supply Make and Buy decision
Authority for Provisioning.

7.03 MATERIAL PROCUREMENT

Methods of Procurement Elements of Procurement Function Heads of

Expenditures Budget Financial Powers Tender Purchase Committee
Methodology of Procurement Direct Material, Indirect Material, Imported Items
including Spares Modes of Procurement Vender Rating Audit and
Procurement Payment Terms and Conditions Procedure for Payment Audit
checks on Procurement.

7.04 STORE MANAGEMENT GENERAL

7.05 STORE RECEIPT

Functions and activities - Organisation - Documentation - Wagon Consignments

Received at Sidings Collection from Railway Goods Shed/ Parcel Office Claims
Spot Payment Procedure Truck Consignment Local Collection Role of
Inspection RPP Receipt of Imported Goods and their procedures Reporting
rejections to Suppliers Various Recoveries from Suppliers Disposal of Rejected
Goods Cash Purchase Procedure Loss Settlements Purchase of Items like
Gases in Supplier s Cylinder Various Office Procedures and Management
Information System.

7.06 STORAGE OF HAZARDOUS AND DANGEROUS GOODS

STORES PRESERVATION

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Types of Material and details of preservation and procedures.

7.08 SECURITY ASPECTS OF STORES MANAGEMENT

Internal checks External checks Safe custody of valuable stores.

7.09 IVENTORY CONTROL

Introduction Basic Problems Economic Order Quantity and Ordering System

Provisioning, Stores and Inventory Control.

7.10 STOCK VERIFICATION

Various Procedures adopted.

7.11 MATERIAL HANDLING

Stores Layout Handling Equipments Safety in Handling - Methods of Storage

Compatible to material handling system Handling of Chemicals Acids and
Kerosine, Paints etc., Lubrication Oil etc., Feeds and other hazardous items.

7.12 CLAIMS AND DISCREPANCIES AND OTHER SETTLEMENT

7.13 DISPOSAL OF SURPLUS STORES, SCRAPS AND WASTE

PRODUCTS

Purpose Categorisation of Items Financial Powers Review of Surplus Items

Agencies for Disposal Modes of Disposal (a) by Factory (b) Auction.

-----------------------------------------------------------------------------------------------

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LIMITED DEPARTMENTAL COMPETITIVE EXAMINATION FOR THE POST

OF CHARGEMAN Gr II (TECHNICAL)

SYLLABUS FOR GENERAL PAPER IN ENGINEERING

(Subject Code No. 1:00/211)

1.01 UNITS
Introduction, Definition, Classification of Units.

1.02 GENERAL SIMPLIFICATIONS

Introduction, Fractions, Decimals, Divisions and
multiplication of fraction

1.03 SQUARE ROOTS

Square and Square roots, Symbol of root, Method
of finding out the Square roots,

1.04 GRAPH
Definition, Rules for drawing graph, Drawing and reading of simple
graph, Graph of simple equations and compound equations.

1.05 RATIO AND PROPORTION

Ratio, Proportion.

1.06 PERCENTAGE
107 ALGEBRA
Introduction, Addition and Subtraction, Multiplication and Division.
Algebra, formulae, Proofs, Factorization, Equations,

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1.08 MENSURATION
Introduction, Rectangle, Square, Parallelogram, Rhombus. Trapezium,
Triangles, Hexagon. Circle, Sector, Segment of a Circle, Ellipse, Length
of Belts, Area of irregular surfaces, Area of four walls, Finding out volume
of solids, frustum of cone and pyramid.

1.09 TRIGONOMETRY
Definition, Trigonometrical formulae, Measurement of angles, Use of
trigonometrical tables and logarithmic trigonometric tables,
Trigonometric values of certain degrees, Area of triangle, line bar, Angle
of elevation and depression, Taper Turning Calculations, Solution of
Triangles using Sine Rule and Cosine Rule.

1.10 METALS
Properties of metal Types of metals, Difference between ferrous and
nonferrous metals, Ferrous metals, Classification of iron, Pig Iron, Cast
Iron Wrought Iron, Steel: Types of Steel, Difference between cast iron
and steel, Alloy steel Type of Alloy steel, Non-ferrous metals, Melting
point and weight. Non-ferrous alloys.

1.11 HEAT TREATMENT

Function of heat treatment, Critical temperature, Annealing. Normalizing,
Hardening. Tempering, Case Hardening.

1.12 DENSITY AND RELATIVE DENSITY

Mass, Unit of mass. Weight, Difference between mass and weight of
substance. Density, Unit of Density. Relative density,

1.13 FORCE
Newton's laws of motion, Unit of force, To find out resultant force, Space
and vector diagrams, Representation of force, Parallel forces Couple,
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Parallelogram law of force, conditions of equilibrium, kinds of
equilibrium, some examples of equilibrium in daily life. Triangle of force,
Converse of triangle of forces, Lami's theorem, Jib Crane,

1.14 MOMENT AND LEVER

Moments, Unit, Arm of Couple and Moment of Couple, Lever.

1.15 SIMPLE MACHINES

Simple Machines, Effort and Load. Mechanical Advantage Velocity Ratio
Output-and-input,-Efficiency, Velocity Ratio and Mechanical Advantage
Pulley Block, Incline Plane, Simple wheel and axle, Simple Screw Jack

1.16 WORK, POWER AND ENERGY

Work, Units of work, Power, Units of power, Horse Power of Engines
Mechanical Efficiency. Energy, Uses of Energy, Potential and Kinetic
Energy, Examples of Potential and Kinetic Energies. Transmission of
power by a belt pulley drive.

1.17 FRICTION
Definition, Advantages and disadvantages of friction. Normal Reaction,
Limiting friction, Laws of limiting friction, Coefficient of friction, Angle of
friction, Inclined plane, Force of friction when the force is horizontal,
Force of reaction when the force is inclined at an angle with the
horizontal.

1.18 SIMPLE STRESSES AND STRAINS

Introduction, stress and Strain, Different type of stresses. Hooke's law
Young's modulas or Modulas of Elasticity, Yield point, Ultimate Stress
and working stress, Factor of safety, Stress-Strain graph, Modulas of
Rigidity. Poisson's Ratio, Bulk Modulas. Relationship between three
modulas for a given material,

1.19 VELOCITY AND SPEED

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Rest and motion, vector quantity, Scaler quantity, Speed, Velocity.
Difference between. Velocity and speed, Acceleration. Equation of
motion, Motion under the force of gravity.

1.20 HEAT
Heat unit of heat, Temperature, Difference between Heat and
Temperature, Boiling point, Melting point, Scale of Temperature, specific
heat, Thermal capacity, Water equivalent of heat, Inter change of heat,
Calorimeter, Latent heat of fusion, Latent heat of vapour, Transmission
ci heat, Thermos flask, Pyrometer, Thermocouple, Thermo-electric
Pyrometer, Coefficient of liner expansion, Indicated Thermal Efficiency,
Brake Thermal Efficiency.

1.21 ELECTRICITY
Introduction. Use of electricity. Molecule. Atom, Particles in Atom, How
electricity is produced, -- Electric current, Ampere, Electromotive force.
Electric Voltage, Potential difference, Resistance, Conductor, Insulator.
Switch, fuse, Circuit, Ohm's law, Series and Parallel connections, Power
Horse Power, Energy, Unit of Electrical Energy.

1.22 PRESSURE
Atmosphere, Atmospheric pressure, Pressure, Unit, Pressure at a depth
in a liquid, Absolute pressure, Gauge pressure, and vacuum pressure,
How to measure pressures.

1.23 CENTRE OF GRAVITY

Introduction, Definition, Certroid, Methods of finding out centre of gravity
of figures, Centre of gravity of certain geometrical configurations, Centre
of gravity calculations.

1.24 THIN CYLINDRICAL SHELLS

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* Thin cylindrical shells, Assumptions, Circumstantial or Hoop Stresses
Longitudinal or Axial Stresses, Relationship between Stresses, Built up
Cylindrical shells.
Reference:
1. Work Shop Calculation & Science
by Kapil Dev, Asian Publishers, Dehli.
2. Basic Work Shop Calculation and Science
By R.P. Kumaer, R. Dev, K.C. Narang
An...hai ki Varol Cach Nos Dohli 115

LIMITED DEPARTMENTAL COMPETITIVE EXAMINATION

FOR THE POST OF CHARGEMAN Gr II (TECHNICAL)

SYLLABUS
FOR MECHANICAL ENGINEERING (Subject Code No.2.01/221)
_________________________________________________________
2.01.01 PROPERTIES AND TREATMENT OF IRON AND STEEL
Brittleness - Ductility - Elasticity - Hardness -Malleability - Plasticity
Toughness - Micro Structure of Steel - effect of heating steel critical
range - Heat treatment of steel - Furnace and Furnace temperatures
- Pyrometers - reasons of Heat treatment - Annealing - normalising -
Hardening and tempering - Hot and cold working - case hardening -
workshop tests for iron and Steel.

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2.01.02 HEAT PROCESS - FORGING, AIVETTING, SOLDERING AND
BRAZING
Hand Forging - forge toots - up setting - drawing down - Bending -
Punching - Drifting - Welding - Power hammers and their tools -
Riveting - Soldering - Brazing - Silver Soldering - Adhesive banding.

2.01.03 POWER, SAFETY AND CARE

Safety in the shop - Mechanical and other accidents - safely devices
Electrical accidents - power - various power driving systems -
bearings wear - lubrication. Gravity - Force - splash - care and order in
work shop.

2.01.04 METAL CUTTING

Metal cutting - Rake and clearance - flat chisel - saw - file - drill -
Grinding drills - Drilling hints. Turning, boring, shaping and planning
tools. Effect of tool off-centre-cutting rake and clearance for various
metals - cutting tools - surface finish.

2.01.05 CHECKING AND MEASUREMENT OF SURFACES.

Surface relation-ship and accuracy test for accuracy flatness.
Squareness - p allis . Roundness concentricity - Angle measurement
Vernier protractor - length measurement. The rule . Callipers -
micrometres ---- Vernier calliper-use of gauges.
2.01.06 LIMITS, FITS AND SURFACE QUALITY
Elements of inter changeable system - Fits, allowances, clearances
and interferences - Types of Fit - Hole basis and shaft basis -
Geometric dimensions and Tolerances - Limit Systems - Surface
quality and Surface finishes.

2:01.07 BENCH WORK AND FITTING.

Equipment used - various hand tools - hand operation viz chapping,
filing, scrapping, Grinding, Sawing, Marking, Drilling, Reaming,
tapping, diaing etc.

2.02.08 LATHE AND LATHE WORK

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Parts of lathe. Types of Lathes - various turning operations - Lathe
tools for various operations - modern development in tool material
and tooling technology - face plate work taper turning - taper gauges
- screw cutting
Determination of gears - pitch and lead cutting a thread - locating tool
marking lathe-chasing dial-internal threads. tapping in the lathe -
Various turning attachments - etc.

2.01.09 MILLING MACHINE AND MILLING OPERATIONS

Parts of Milling Machine - Types of Milling Machines - Milling cutters -
cutter material - means of holding cutters - work holding system and
devices indenting - simple and differential indenting · Cutting speed
and feed - various milling operations - gears and gear cutting.

2.01.10 GRINDING
Kinds of Grinding Machines. Grinding Operations - Normal defects in
cylindrical Grinding and their remedies - Grinding wheels • kinds of
abrasive, Grain size, bond, Grade, Structure, shape - 1xessing and
trueing. Allowances for Grinding - other factors.

LIMITED DEPARTMENTAL COMPETITIVE EXAMINATION FOR THE POST

OF CHARGEMAN Gr II (TECHNICAL)
SYLLABUS
FOR CIVIL ENGINEERI (Subject Code No.403/223)
2.03.01 MATERIAL USED
Cement, Bricks, Sands, Coarse aggregates, Fine aggregates, Glass, Stones,
Timber, Steel, Fibbers, Ceramics, Aluminium, Plastics, Paints, distempers,
Varnishes etc. modern developments of material for civil constructions
Construction Equipment’s Hand tools, Concrete mixer, vibrators, Bitumen
handler, Road Rollers, Water tankers, pneumatic equipment’s etc.

2.03.02 CONSTRUCTION ENGINEERING

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a) Types of soils, bearing capacity of soils, improving bearing capacity of
soil. Different types of foundations, general design principles Machine
foundations, excavation of foundations setting out plan
b) Stone Masonry. Different types Brick Masonry, types of Bricks,
Classification of Brick Masonry
c) Damp proofing & Teronte proofing of Buildings.
d) Scaffoking, Shoring underpinning etc.
e) Lintels, Classification of lintels,
f) Planning & design of stairs
g) Plain Concrete. Material specification, water cement ratio, shrinkage,
strength, transportation of concrete, setting time. Slump. Ininte in
concrete anniling
h) Reinforced Cement Concrete - Advantages type of mixes, equivalent
area of concrete columns, beams slabs etc. Framework for concrete.
i) Doors & windows - Different types, types of timbers used, joints etc.
j) Ground floors - type of floors, acid proofing of floor etc.
k) Roof - Classification-of-roofs, flat roofs, water proofing of roofs, drainage
of flat & pitched roof. .
l) Roof coverings - tiles, A.C. Sheets, G.1 Sheets, PVC Sheets, Glass
coverings Bituminous felt.
m) Structural Steel works - Rolled steel sections, angles, Channels, 1
beams flat etc. steel trusses.
n) Fire protection of Buildings, fire resisting material construction etc.
o) Thermal Insulation of Buildirigs, air, conditioning & ventilation, lightings,
Accoustics & sound proofing etc.
p) Building planning, site selection, open air space requirements, wall
thickness etc.
q) White Washing, color washing, distempering, cement painting, pants,
varnishes, brushes, types of paints their applications, Preparatior of
surfaces etc
r) Services in Building, Water supply requirement of Buildings. General
pipe worns, hydrants, water meters, Drainage of house, sanitary fittings,
rain water drainage, traps septic tànk etc.

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3.03 WATER SUPPLY -------
i. Types oi water sources - Ground sources, under ground sources etc.
ii. Rate of Demand per capita requirements, Requirements for Different
purposes
iii. Quality of Water - Analysis of water, physical, chemical Bacteriological
test water borne deceases.
iv. Pumps - types of pumps used - centrifugal, turbine pumps, submergible
pumps.
v. Design faction of water - chlorination of water, form of chlorination, Tests
etc.
vi. General idea on water treatment plants, sedimentation, coagulations,
filtration etc.
vii. Conveyance & Distribution of water pipes, types-pipe--corosion, effects
wastage of water, waste water survey etc.
viii. Pipe Appurtenances - Air valves, staice valves, bibcocks, fire hydrants,
non-Yehuw valve etc.

2.03.04 SANITARY ENGINEERING

I. Sewrage Systems, storm water drains, Quantity of sewage, construction
of sewers, sewer Appurtenances, flushing tanks, grease & oil traps,
manholes.
II. Pumps for sewage, centrifugal pumps, Non clog pumps,
III. Quantity of Sewage - Properties Cycle of decomposition, Analysis,
Physical, Chemical, Bacteriological Tests requirement.
IV. Sale Disposal of sewages - Methods of sewage treatments..
V. Pollution Control Requirements

2.03.05 ESTIMATING COSTING & CONTRACTS

i. Estimating quantities for elements of works.
ii. Rate analysis. Requirement of manpower, quantity per unit etc.
iii. Administrative Approval, Technical Sanctions for works, Types of
Tenders, Comparative Statement specification of works, condition of
contract, Labour Law requirements.
iv. Building valuation - Market Rate/Book Value etc.
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SYLLABUS
· FOR
SPECIAL PAPER IN MECHANICAL ENGINEERING (IT) FOR
CHARGEMAN GR. 11/TECH
(Subject Code No._____)
(100 Marks)
_________________________________________________________
COMPUTER ORGANISATION: Digital components, data representation,
Register Transfer & Micro operations. Basic computer organization, central
processing unit, ALU, Input-Output organisation, Memory organization.

IT APPLICATION AND TOOLS: Computer Organization, Operating Systern,

Word Processing, Spread sheet Package, Presentation Package.

BUSINESS SYSTEMS: Introduction to Business Data Processing, Concepts

of Files, Principles and Technology of Programming, Introduction to
Management Information System, Evolution of Information Systems, Decision
Support Systems.
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STRUCTURED SYSTEM ANALYSIS & DESIGN: Introduction, System

Analysis, System Development cycle, System Planning, Modular and
Structured Design, System design and Modeling, Input and Output
specification, System implementation and maintenance, Computer syslern
audit and security, Object Oriented analysis & design,

PROGRAMMING & PROBLEM SOLVING THROUGH "C" LANGUAGE:

Introduction to programming, Algorithms for Problem solving, introduction 10
"C" Language, Data Zypes & enumerations, Conditionals and Loops, Arrays.
Functions, Structures and Unions, Pointers, Self referential structures and
linked lists, File processing.

DATA STRUCTURE THROUGH "C" LANGUAGE: Basic concepts of dala

representation, introduction to Algorithm design and data structure, Arrays,
Stacks and Queues, Linked lists, Trees, Searching, Sorting and complexity,
Graphs.

INTRODUCTION TO DATA BASE MANAGEMENT SYSTEMS: Introduction

10 Data base systems (DBMS), data base Architecture and Modeling, Entity
Relationship Model, Relational Model, Data base Normalization, introduction
to SQL, Backup and Recovery Data Base security and integrity, Design and
Development of data applications on commercial RDBMS Platforms.

BASICS OF OS, UNIX & SHELL PROGRAMMING: Operating system

concepts, file system, file attributes, vi editor, the shell as interpreter, process
management networking tools, Filters and regular Expressions, Shell
Programming, C programming Tools, UNIX internals, Administering File
systems, general System Administration.

DATA COMMUNICATION AND NETWORKS: Fundamentals of Data

communications, Transmission media, ?data modems, multi-channel data
communication, networking fundamentals, OSI model and TCP/IP suite, data
link protocols, Local Area network (LAN), Wide area Network (WAN), Data
transmission network, Wireless communication, Security and Privacy.

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INTERNET TECHNOLOGIES AND TOOLS: Introduction to Internet and its
applications, Intemet Infrastructure, Internet Protocols, Internet working with
TCP/IP, World Wide Web, HTML.

INTRODUCTION TO OBJECT ORIENTED PROGRAMMING & C++:

Principles of Objec: oriented programming, Elements of C++ Language,
Functions, Classes and objects. Constructors and Destructors. Operator
Overloading, Derived. classes and Inheritance, Pointers, Virtual Functions,
Streams, Exception handling; Class Libraries, Advanced classes.

INTRODUCTION TO OBJECT ORIENTED PROGRAMMING THROUGH

JAVA: The Java Language, The Java Library.
COMPUTER GRAPHICS: Introduction and applications, Graphics Devices,
2D drawing Geometry, Conics, and Curves, Graphic Operations, 3D graphics,
Animation, Graphic Standards, Multimedia.

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HINDI NOTES new edition
1. Labour accounting-=
2. Factory accounting-=
3. Store procedure=
4. Material management=
5. Office procedure=
6. Administration=
7. General knowledge=
8. LAFA QUESTION PAPER (2001 TO 2016) =
9. FASP QUESTION PAPER (2001 TO 2020) =
10. GK QUESTION PAPER (2001 TO 2020) =
11. OPA QUESTION PAPER (2001 TO 2016) =
12. MECHENICAL QUESTION PAPER (2001 TO 2016) =
13. CHEMICAL QUESTION PAPER 2006-16
14. IT QUESTION PAPER
15. SPMM QUESTIONS PAPER 2001-16=
+ Postage charge

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Factory Accounting
1

Description of Certain Terms

Acceptance of Tender (A/T) is a document issued by DGS & D to
the prospective supplier giving all details for the supply of a material.
Adjustment voucher is a document prepared to adjust the
difference between the original value and the subsequent revised value of
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any ledger document.
Analytical Statement is a statement showing stock balances of the
Factory at the end of each month and also at the end of the year in the
heads viz. (a) working stock (b) maintenance stores, (c) obsolete stores,
(d) total agreeing with PSA balance.
Annual Store Account is an account complied in the prescribed
form detailing all receipts and issues in respective heads.
Bin Card A document maintained by Stores Section to record all
receipts and issues, quantities only, and striking out balance of the
material after each transaction. One Bin Card is maintained for store
(item).
Danger level: It is the stock balances of a material which when
reached will hamper production unless immediately procured.
Day Work Card is the record of jobs done and time taken thereon by
workmen engaged as Day Workers.
Demand Note is the document on which materials are requisitioned in
the Factories by the Shops from the Stores Section.
Red Demand Notes are documents (used in Factories
working on Except System) on which the components
manufactured in a Factory are drawn from the initial manufacturing
Shops for purpose of assembly.
Factory Accounting
2
Estimating is the action of finding the cost, which is likely to be
incurred on the manufacture of an article before it is actually
manufactures. It is the calculation of a probable cost of an article before
the manufacturing starts based on the predetermined quantity of material
and labour required.
Except system is the system under which components of an article
are manufactured on separate Work Orders provided for them in the
syllabus.
Extract: Extract is an order issued by the DGOF for the manufacture of
stores or performance of services in Factories.
Indent: A requisition placed on DGS & D for procurement of Material.
Inter Factory Demand (IFD): The demand placed by one factory
on another for supply of components, castings, forgings, etc. is called IFD.
Invoice: It is the voucher giving details of the stores supplied by foreign
countries and also their value.
Issue Voucher: A document in which all particulars of stores issued
are recorded.
Materials: The term 'materials' refers to the commodities supplied to
an undertaking for the purpose of consumption in the process of
manufacture or of rendering service or for transformation into products.
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Material Abstract: An abstract prepared by ‘H’ Section of Accounts
from D/Notes, R/Notes etc.
Non-moving Stores: Materials in ledger charge, which are not used
for a considerable period.
Non-productive charges- Represent all the variable overhead
charges other than Power and Machinery Charges (P.M.) and Store
Factory Accounting
3
Indirect (S.I.) charges and are usually absorbed on the basis of total
direct labour (hand and machine) expended on a job.
'P' Voucher: Vouchers on which the stores are issued direct from the
production of the factories are known as Production Vouchers or in its
abbreviated form 'P' Vouchers.
Piece work Card is the document used for recording the operations
to be carried out and the results of work done by the piece workers at a
fixed money rate for each unit completed.
Power and Machinery charges are variable charges, which relate
to the repair, maintenance and running of machinery and are usually
absorbed on the basis of direct machine labour only.
Red Notes are documents on which surplus materials or scrap in Shops
are returned to the Store Section.
Red Return Notes are documents on which surplus
components drawn on Red Demand Notes are returned to the
component store.
Standard Estimates are prepared to show the list of standard
quantities of materials and the approved labour charges authorised for the
manufacture of a single unit or a number of units of a product.
Stock Pile: A stock of strategic material maintained for meeting
requirements at any time in emergency.
Stores Indirect charges -These charges are the expenditure
incurred whether in the Store or other Sections in connection with the
care and custody of the stock. These charges form a part of the total
Indirect Charges variable of a Factory.
Supply Work Order Draft (SWOD): An authority issued under
the orders of the General Manager to undertake jobs of adhoc nature or
petty minor works within a limited amount.
Factory Accounting
4
Tender: A document issued to prospective supplier of a material asking
for quotations and other conditions.
Limited Tender: Tenders issued to a limited number of
prospective suppliers.
Open Tender: Tender called for through Advertisement in
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NewsPapers.
Single Tender: Tender issued to one supplier only due to
urgency or in case of proprietary article.
Warrant is an authority given to shops concerned for undertaking the
production of items stated in the warrant.
Manufacture Warrants - The General Manager's authority to
the Shops to undertake work order on the Factory. This is usually
termed Work Order Sheet in Clothing and Parachute Factories.
Material Warrant -A document indicating, on the basis of the
standard estimates, the quantity of material required for a job on
the authority of which manufacturing shops demand the materials
required. It is usually termed the Work Order Sheet in Clothing
Factories.
Replacement warrants are Warrants on the authority of
which work to cover the manufacture of articles found defective in
the course of manufacture is undertaken.
Work Order is the numerical code number assigned to each kind of
expenditure incurred or works undertaken in Factory.
Supplementary work order -An order issued by the
General Manager on an authorized Gazetted Officer for the
execution of a petty casual work or for internal factory services
which do not require the sanction of the DGOF.
Factory Accounting
5
Syllabus of Work Order- Part I is a catalogue of Work
Orders common to all factories consisting of indirect, direct, capital,
process orders etc., other than regular outturn orders, which are
covered in part II syllabus.
Syllabus of Work Order Part II is a catalogue of Factories'
Outturn Work Orders. Each Work Order is assigned a serial number
for identification and accounting purpose and the series is usually
arranged either in alphabetical or P.V.S. order.
Factory Accounting
6

Abbreviations used
A/T Acceptance of Tender
AFL Agreement Form of Labour
AHSP Authority Holding Stores Particulars
AO Accounts Office/Accounts Officer

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BER Beyond Economical Repairs
BM Building Maintenance
CCA City Compensatory Allowance
CP Central Purchase
CSR Civil Service Regulations
CST Comparative Statement of Tenders
DA Dearness Allowance
DC Disbursement Certificate
DGOF Director General, Ordnance Factories
DGS & D Director General of Supplies and Disposals
DV Disbursement Voucher
EM Electrical Maintenance
ESTT Establishment
FOH Fixed Overhead
HRA House Rent Allowance
I.E. Industrial Employee
I/Note Inspection Note
IFD Inter Factory Demand
LAO Local Accounts Officer
LB Labour Bureau
LO Labour Office
LP Local Purchase
MM Mechanical Maintenance
N.P. Charges Non-Productive Charges
NC Grant New Capital Grant
NDA Night Duty Allowance
NDB/NSB Night Duty Bonus/Night Shift Bonus
NRR Non-recurring rates
OFB Ordnance Factory Board
OT Overtime
P & M Charges Power and Machinery Charges
'P' Vouchers Production Vouchers
PDC Probable Date of Completion
PLB Productivity Linked Bonus
PM Plant and Machinery
PW Piece Work
R & E Rates & Estimates
Factory Accounting
7
RR Grant Renewal and Replacement Grant
S.I. Charges Store Indirect Charges
SWOD Supply Work Order Draft
TE Tender Enquiry
U.A.R. Unavoidable Rejection
Vr. Voucher
VOH Variable Overhead
W.Os. Work Orders
Wt. Warrant
Factory Accounting
8

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Importance of Cost Accounting

Exercise of control over expenditure in a manufacturing business is the
main function of the Cost Accountant. Cost Accounting is an integral part
of all good management. The ascertainment of costs is not an end in
itself, but the object is to provide means whereby costs can be controlled.
It is necessary for a Works Manager to be an expert in the Mechanical
processes his work involves, and possess the ability to control men, but
these abilities do not complete the requisites for the successful
performance of his function. He must also possess a cost sense, or ability
to analyse the cost of operations, materials and expenses under his
control with a view to carrying out manufacture at the minimum cost.
Accountants' extract and present figures, which form the background of
economic production, covering a wider, ground than the origin and
incidence of manufacturing costs. The Works Manager must, however,
consider it part of his job not only to control the direct costs of production
but also understand, scrutinize and be responsible for shop expenses and
their incidence. He is engaged to produce at or below a predetermined
cost, or in the absence of budgeted cost, at the minimum practicable cost.
A costing system must be adopted to suit the nature of the work it deals
with, and this can only be achieved by the fullest collaboration between
the Works Manager and the accounting department. The expense of a
costing system must be covered by the results. Moreover, the system
must be properly used. A rough system may appear to give good results,
but may not be capable of being properly checked.
Costing is a management mechanism that portrays in money values the
activities of the firm. Scientific cost cannot be achieved with haphazard
factory methods, and it is significant to observe that, when reorganization
of a firm proves necessary, one of the first steps is to appoint a Cost
Accountant in control.
Cost Accounting is, therefore, a vital factor in scientific management.
Factory Accounting
9

Elements of Costs
&
Analysis of Expenditure
The expenditure incurred in manufacture is classified under three main
categories viz. (a) Wages paid to Industrial Workers, (b) Materials and (c)
Other Expenses. In relation to product costs, the expenditure falling under
the above three categories are further classified as direct and indirect
expenditure. For the purpose of costing, wages are analysed into direct
labour costs and indirect labour costs, materials into direct material costs
and indirect material costs, other expenses, the bulk of which represents
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salaries paid to supervisory and administrative personnel, generally fall
under the category of indirect expenditure. Indirect labour, indirect
material and other indirect expenses together constitute the overhead
expenditure. While the direct labour expenditure and direct material
incurred in the manufacture of each product can be measured accurately
and charged direct to each job, overhead expenditure representing the
cost of providing various production and administrative services incidental
to production, cannot be charged directly to each job. Such expenditure
being common to all production activity, it is apportioned to the cost of
each job as equitably as possible, following certain well-recognised cost
accounting principles.
By means of the above type of analysis, the cost of each article
manufactured in the factory is compiled under three elements of cost viz.
(i) direct labour (ii) direct material and (iii) overheads.
Factory Accounting
10
Analysis of Expenditure
------------------------------------------------------------------------------------------
Material = Direct Material + Indirect Materials
+ Wages = Direct Wages + Indirect Wages
+ Expenses = Direct Expenses + Indirect Expenses
------------------------------------------------------------------------------------------
Total Cost = Prime Cost + Overhead
------------------------------------------------------------------------------------------
Classification of Indirect Expenses
Indirect Expenses
____________________________________________________________
Works or Office & Selling Distribution
Factory or Admin. Expenses Expenses
Production Expenses
Expenses
Statement of Total Cost
1. Direct Material ]
2. Direct Wages ] PRIME COST
3. Direct Expenses ]
4. PRIME COST + ]
Production or ] WORKS COST
Works or ]
Manufacturing Expenses ]
Factory Accounting
11
5. WORKS COST + ] COST OF PRODUCTION
Office & Admin. Expenses ]
6. COST OF PRODUCTION + ] TOTAL COST OR
Selling & Distribution Expenses ] COST OF SALES

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7. COST OF SALES + ] SELLING PRICE
Profit ]
Factory Accounting
12

Organization of the Factory

Each Factory is divided into a number of Sections representing: -
(a) Production Sections
(b) Service sections and
(c) Administrative Sections.
Factory
Production
Sections
Service
Sections
Administrative
Sections
MM, EM,
BM, MT
etc.
LB, ESTT, BG, LO
etc.
Each Production Section is engaged in producing one or more similar
products requiring the use of similar production facilities (machines etc.).
The service Sections are those connected with the generation and
distribution of electric power, steam and water services, maintenance of
plant, machinery and buildings. The administrative sections are those
connected with the general administration of the factory, labour bureau
and labour welfare etc.
Based on the manufacturing programme, the planning department
releases production orders to various production sections, in batches, in
the shape of Manufacture Warrants.
Predetermined control over utilisation of material and
labour
The most important feature of the cost accounting system is control over
utilization of labour and material expenditure on each job through
predetermined estimates. For repeat items, production of which is well
established, the estimates are standardised by proper time and motion
study and these estimates are called Standard Estimates. The Estimate is
prepared for a standard batch showing the details of various labour
operations required in the production of the article, the time required for
Factory Accounting
13
each operation and the labour cost of the operation. Similarly, each
material required for production of the article is shown in detail indicating
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the quantity required for a normal batch.
The production shops cannot exceed the limits indicated in the
manufacture and material warrants for utilization of labour and material
without obtaining special authorisation from the planning department.
Such authorisations are issued in the form of non-recurring revisions.
Factory Accounting
14

Ext racts
Ordnance Factories are under the control of OFB. OFB in liaison with
Ministry of Defence gets the order for the requirement of stores for Army,
Navy, Air Force etc. Ordnance Factory Board directs the Ordnance
Factories to manufacture the stores for Military by placing Extract on the
factory. Extract is the authority issued by OFB to Ordnance Factory to
undertake manufacture of any item in the concerned factory.
Classes of Extract
Extracts are of 5 different classes, i.e. Class I to Class V as described
below.
Class Description
Class I Orders for Army, Navy, Air Force as per their requirement for
manufacture/repair of stores
Class II Payment Work Order from State Governments, Railways, MES etc.
Class III Services rendered by one Ordnance Factory to other Ordnance
Factory (IFD)
Class IV For services internal to factories other than capital service. This is
also known as Supplementary Work Order Draft (SWOD).
Class V For Capital services (e.g. Manufacture of Machines for Stock)
Intimation regarding acceptance of Extract
After receiving the advance copy of Extract, concerned factory will
investigate whether it can undertake this work in addition to existing
workload. Factory, after investigation of material and equipment position
and scrutiny of drawings, intimates OFB of its acceptance of Extract for
manufacture of the item with probable date of completion (PDC).
Then one copy of Extract is sent to the concerned factory by OFB and 3
copies are sent to AHSP (Authority Holding Stores Particulars) generally
Controller of Inspection. AHSP, after checking the nomenclature,
specifications, drawing and other necessary particulars to guide for
manufacturing of stores, sends one copy duly vetted to Factory and one
Factory Accounting
15
copy to local Inspectorate and retains one copy for itself. Depot indents
are also are sent to Factory through AHSP. IFDs are sent directly to
factories.
Information contained in an Extract
The Extract will contain the following information:
(1) Name of the Factory
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(2)Class of Extract
(3)Extract No.
(4)Date of commencement and completion of supply
(5)Nomenclature of stores
(6)Number or quantity on order
(7)Distribution
One copy of this Extract is also sent to Local Accounts Officer (LAO)
directly by indenter or by concerned factory on receipt of extract for
costing purpose.
Entry in Extract Register
After receiving the Extract in the factory, it is sent to Central Planning for
recording entry in the Extract Register. Thereafter it is sent to the
concerned planning group for necessary actions. Planning Officer in
consultation with Production Officer decides which Production Section will
undertake the job/operations involved. Works Office allocates Work Order
Number and Warrant Number.
Action by Planning Section
On receiving the Extract, Planning Section initiates preparatory work and
directs:
(1) Design Office to prepare operation layout, design of tools, jigs,
fixtures, cutters etc. as required
Factory Accounting
16
(2) Rates & Estimates (R & E Section) to prepare Labour and
Material Estimates
(3) MCO & PV to procure materials
(4) Production Shop to undertake manufacture of jigs & fixtures
required.
Action by other Sections
PV Section forwards copies of Supply Orders to Planning Office, Stores
Section for receipt of stores, WI or QC for undertaking inspection of
material when required.
R & E Section will prepare and send Material Estimate to Planning for
initiation of procurement of material. Planning office issues both Material
Warrant and Labour Warrant as per Estimates received from R & E
Section to the concerned Production Shop(s) who will start manufacturing
of the item.
Factory Accounting
17

Estimates
For all but small orders, which are unlikely to be of a recurring nature,
Standard Estimates will be prepared detailing
(i) the various operations necessary to produce an article,
(ii) the labour charges to be paid for these operations and

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the quantity and description of materials required and standard
(iii)
recoveries of materials to be returned to stores.
When it is necessary to revise the Standard Estimate the alterations will
be effected by means of Revision Forms. After correcting the Standard
Estimates the revision forms will be filed with the standard Estimates. For
small orders estimates are prepared on SWO Drafts. A copy of the
Standard Estimate as well as the Revision Form will be supplied to the
Accounts Office for pricing.
Pricing of estimates correct to two places of decimal:
Standard Estimates will be prepared and priced correct to two places of
decimal. This would not, however, apply to the piece work or day work
rates used for pricing the labour or the ledger rates used for pricing of the
material. These will be rounded to 4th place of decimal.
Concurrence of Accounts Officer
Prior concurrence of Accounts Officer will not be necessary in respect of
Standard Estimates, Revisions, S.W.O. Drafts and Non-recurring rates.
These documents, will, however, be subject to post-audit by Accounts
Officer and necessary documents will be furnished to AO for this purpose.
Inclusion of normal rejection in Estimates
Normal rejections inherent in the manufacture of an article should always
be included in the Standard Estiamtes.
Factory Accounting
18
Spot Estimates
Spot Estimates instead of detailed estimates will be prepared in respect of
'small orders'. The expression 'small orders' would cover an order,
individual or bulked, in which the estimated value of aggregate direct
labour charges (indirect labour charges in respect of the job done on
indirect W.Os.) does not exceed a specified limit.
Factory Accounting
19

Warrants -Issue, Control and

Closing
What is a warrant?
Warrant is an authority given to shops concerned for undertaking the
production of items stated in the warrant.
Categories of warrants
Warrants are of two categories, viz. Manufacture Warrant and Material
Warrant.
What is a Manufacture Warrant?
It is the General Manager's authority to the Shops to undertake work
order on the Factory. This is usually termed Work Order Sheet in Clothing
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and Parachute Factories.
Manufacture Warrants are prepared as per standard estimate for each
item of work, which contains the following information:
(a) Work Order Number, Warrant Number and date
(b) Authority for work (i.e. Number of Extract, IFD, Purchase Order
etc.)
(c) Estimate Number
(d) Drawing Number
(e) Nomenclature of the article to be manufactured
(f) Name of the Shop, which is to undertake the manufacture
(g) Labour Operations and their rates
Material Warrant
Material Warrant is a document indicating, on the basis of the standard
estimates, the quantity of material required for a job on the authority of
Factory Accounting
20
which manufacturing shops demand the materials required. It is usually
termed the Work Order Sheet in Clothing Factories.
These warrants contain the same information as in manufacturing
warrants except that in this case materials required are detailed with
quantities, instead of labour operations.
Procedure for issue of warrants
Warrants are issued by Warrant Office to Shops based on requisitions
received from concerned Planning Group or Office. Warrants are prepared
on Computer and details like Work Order Number, Warrant Number,
Quantity ordered, date of issue to Sections and Estimate Number are
recorded in Warrant Register. Distribution of warrant issued is as under:
(a) Material Warrant and Manufacture Warrant to initial section
drawing the material from Store Section.
(b) One copy of Manufacturing Warrant to Planning Office.
(c) One copy of Manufacturing Warrant to each Section concerned.
(d) One copy of each Material Warrant and Manufacture Warrant to
Accounts Office
(e) One copy of Material Warrant retained in Warrant Office.
Further Categorisation of warrants
Warrants are further categorised as under as per the type of production
required.
(a) Production warrant
(b) Tool warrant
(c) Quarterly warrants
(d) Warrants for manufacture of sundry items or maintenance
components of machines
Production Warrants
Factory Accounting
21

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All warrants issued for manufacture of components, assemblies and misc.
jobs are categorised as Production Warrants.
Numbering of warrants
From the number shown on the warrants the category of warrant can be
understood.
Warrant Number has 11 digits. First seven digits indicate the main
warrant, 8th digit indicates the type of warrant and last three digits are
used to issue sub-warrants.
0017513 1 000
Type Code: 1 Production Warrant
2 Tool Warrant
0 Quarterly warrant, SWOD, Warrant for sundry
Items or maintenance components of machines
all issued under indirect work orders
Tool Warrants
Warrants issued for tooling required to manufacture components and
assemblies of a particular item of production are categorised as Tool
warrants.
Quarterly warrants
Quarterly warrants are prepared by different sections and offices for
drawal of stationery, sundry items, etc. Material warrants are prepared in
triplicate indicating different materials required against each type of work
order and forwarded to Warrant Office for numbering. Original of the
warrant document is returned to the section concerned and the 2nd copy is
forwarded to Accounts Office.
Main Warrant
Number
Used to issue
sub-warrants
Type of
Warrant
Factory Accounting
22
Warrants for manufacture of sundry items
Requisitions for manufacture of sundry items such as cupboards, wooden
platforms, items required for maintenance of machines etc. are forwarded
to R & E Section for preparation of estimates. R & E section forwards the
requisition along with the estimate prepared by it to Warrant Office for
issue of warrants. Warrants are prepared and recorded in Warrant
Register before issuing it to Shops.
Record keeping of warrants in Sections
Each section has to record the details of warrants issued to it in a register.
As the item against a warrant is taken up for manufacture, details are
recorded on Material warrant and Manufacture Warrants. Details to be
recorded are as follows:

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Material Warrants: Numbers of (a) Demand Notes for the
material drawn and (b) Return Note, if any material has been
returned.
Manufacture Warrants: Details of Piece work Cards for labour
booking claimed. Material received, material despatched to other
sections or Central Godown (CG) and rejections as also details of
I/Notes raised by final section.
Completion and closing of warrants
Duly completed warrants will be returned to Warrant Office for closing and
onward transmission to Accounts. Warrants received from each section
will be scrutinised and kept in Warrant Office. When all the sections
involved in a warrant have returned their warrant duly completed, warrant
will be kept for closing in a separate folder. Warrants are closed once in a
month and forwarded to Accounts. A monthly report of outstanding
warrants is prepared and forwarded to OFB duly vetted by Accounts.
System of issue of warrants
There are two systems of warrant issue. They areFactory
Accounting
23
(1) Except system
(2) Sub-warrant system
Except system
When separate warrants are issued for components and sub-assemblies of
a particular assembly against 40 series of work order, it is called issue of
warrant under Except System. Components are made and kept in Central
Godown and are drawn on Assembly Warrants through demand notes.
This system is generally used for issue of warrants where the order is for
bulk quantity.
Sub-warrant system
In this system there is only one warrant number for Assembly and
components of assembly. Assembly will be given main Warrant number
component will be numbered with a sub-warrant number as shown below:
Main warrant number will be as 0017513 1 000
Sub-warrant number will be as 0017513 1 001
002
003
so on
This system is adopted where order quantity is small and not of a
repetitive nature. In this system I/Note is prepared for Main Assembly
warrant only and I/Notes are not required to be prepared for components.
Duration of warrants
Warrants should normally be issued on a short-term basis, i.e. for such
quantities as could be produced within 3 months.
In exceptional cases longer duration for warrants may be allowed upto 6
months, but such cases should be limited to the minimum.
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Factory Accounting
24
Extension to the life of warrants must, in no case, be granted for more
than once. The manufacturing section concerned must ensure closure of
warrants within the specified period.
Rejections
Rejections taking place in warrants are recorded by each section on the
back side of the manufacturing warrant and replacement orders are raised
duly certified by Inspection Section. When the warrants are completed
these replacement orders are forwarded to Warrant Office along with
warrants. In case of sub-warrants these replacement orders are forwarded
to Warrant Office whenever rejections take place since replacement
quantities are be authorised on the same warrant for taking up the
manufacture to complete the main warrant. In case of Except system of
warrants, replacements are not authorised on same warrant but the
warrant is short closed. Fresh warrants are issued to cover rejections.
[Replacement warrants are Warrants on the authority of which work
to cover the manufacture of articles found defective in the course of
manufacture is undertaken.]
Unavoidable Rejection Percentage (U.A.R.)
Every estimate for manufacture of components makes a provision for
rejections in terms of percentage (i.e. 5%, 10%, 15% etc.). If rejections
against a warrant are within the U.A.R. percentage authorised in the
estimates, rejections are termed as normal rejections. If the rejections
against warrants are more than the authorised percentage, then that
rejection is termed as abnormal rejection and will have to be regularised
as loss.
Warrant
No.
Qty.
ordered
Qty.
completed
Rejection U.A.R. % Rejection
allowed
Remarks
17513/1 400 360 40 10 40 *
17514/1 400 350 50 10 40 **
* Rejection is within UAR % allowed.
** Here 10 Nos. are rejected over and above the UAR % and so a loss
statement is to be prepared for 10 Nos.
Bad Material Rejections
Factory Accounting
25
In case of Castings and Forgings, rejections during the process of
manufacture may take place due to bad material (like blowholes, hard
materials etc.). In such cases, replacement orders will be raised duly
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certified by Inspection and will be forwarded to Store Section along with
rejected materials. Store Section will receive the material and sign the
Replacement Order. Stores Section will then raise Replacement Orders on
Trade Firms. Replacement free of cost will have to be made by Trade
Firms who have supplied the material. A copy of replacement order raised
by Stores will be forwarded to PV Section and Warrant Office. If trade
Firm fails to replace material within the specified time period, PV Section
will recover the cost of such materials from the pending bills of the
concerned firm.
In case of materials supplied by sister factories no such replacements are
received and factory has to adjust such rejections against U.A.R.
percentage provided in the estimates.

I/Notes
There are different kinds of I/Notes raised for warrants issued. These are:
1 Assembly warrants, spares, civil items
regular issues
'O' voucher or
'P' voucher (PR)
2 Tool warrants 'O' voucher (TR)
3 I/Notes for Except system warrants 'O' voucher (PR)
4 Nominal I/Notes 'O' voucher (PN)
Transfer Vouchers
Transfer voucher is a document prepared to transfer materials, labour,
and overheads from one warrant or work order to another.
Factory Accounting
26

Recording of attendance of
Industrial Employees
Normal Working Hours:
The normal working hours a week in Ordnance Factories have been fixed
at 44 3/4 hours, at the rate of 8 hours per day for 5 days from Monday to
Friday and 4 3/4 hours on Saturday. Sunday is weekly off day or Holiday.
Recording of attendance of Industrial Employees
Each worker is issued with a token duly marking the ticket number
allotted to him/her. The same will be picked up from the Central Ticket
Board at the Factory (Workshop) Gate and hung at the Section Ticket
Board while mustering in.
Token numbers of late comers will be noted by LB representative at the
gate. They will be marked late as under:
(a) Late upto 15 minutes 15 minutes late
(b) Late by 16 minutes onwards upto 30 minutes 30 minutes late
(c) Late by 31 minutes onwards upto 45 minutes 45 minutes late
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(d) Late by 46 minutes onwards upto 60 minutes 60 minutes late
Late attendance beyond 1 hour is not permitted.
Soon after the Gate is closed, LB section prepares a shopwise list showing
the ticket numbers of tokens that have not been lifted (picked up) from
the Central Ticket Board.
Casualty Report
All Sections will prepare a Casualty Report based on physical check of
attendance which would be rechecked by scrutiny of the Section Ticket
Board and forward it to the Accounts Office as early as possible but not
later than 11.00 AM for check against the acquittance rolls. Sections
Factory Accounting
27
working more than one shift will submit Casualty Report for each shift
separately. Late Memos in respect of individuals who have reported late
also will be sent to Accounts.
Muster Roll
The main attendance record of the workers maintained by LB is known as
Muster Roll. Muster Rolls are maintained gangwise/shopwise for every
month. The position of the workers' attendance viz. present/absent, late
and overtime worked etc. will be marked in the muster roll suitably and
submitted to Accounts Office. The AO will ensure correctness and
determine the total number of days of attendance, OT hours, NSB hours,
NDA hours, etc. with reference to Casualty Memos, OT Memos, Late
Memos, etc.
Leave, shortage of work, injury, off duty, OT, absent, etc. will be marked
in the Muster Roll by different symbols. Night Duty, Day Duty, Casual OT,
etc. will also be found in the Muster Roll. These particulars will be marked
by LB on day to day basis.
Factory Accounting
28

Working Hours
(Provisions of the Factories Act, 1948)
Weekly working hours: Not more than 48 hours in any week for
adult workers.
Weekly holidays: First day of the week (Sunday) is a weekly holiday.
Weekly holiday can be substituted subject to the some conditions such as:
(i) The worker has or will have a holiday for a whole day on any of
the three days immediately before or after the said weekly
holiday, which is substituted.
(ii) Due notice regarding the substitution is given to the Inspector
of Factories and a notice regarding substitution is displayed in
the factory.
(iii) The substitution does not result in any worker working for more
than 10 days consecutively without a holiday for a whole day.
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(iv)In case the substituted holiday falls on any of the three days
immediately preceding the weekly holiday, for the purpose of
calculation of weekly hours of work, the work done on Sunday
is to be included in the preceding week.
Compensatory holidays: Sometimes some factories may be
exempted from the operation of provision relating to weekly holidays as
cited above.
Due to exemption from the operation of provision relating to weekly
holidays if any worker is deprived of any of the weekly holidays, he shall
be allowed compensatory holidays of equal number to the holidays so lost.
The compensatory holidays shall be allowed within the same month in
which the holidays were due to him or within two months immediately
following that month.
Factory Accounting
29
Daily hours of work: The daily working hours for adult workers shall
not exceed nine hours in any day. This is subject to the limit on weekly
hours of work also.
To facilitate change of shift this limit may be exceeded with the approval
of Chief Inspector of Factories.
Intervals for rest: The periods of work of adult workers shall be so
fixed that no period shall exceed five hours and no worker shall work for
more than five hours before he has had an interval of rest of at least half
an hour.
½ hour for rest prescribed is the minimum limit. The rest period may be
one hour or more subject to the condition regarding spread over.
Period of work not exceeding 6 hours without an interval for rest may be
permitted by the Chief Inspector.
Spread over: The periods of work including intervals for rest shall not
spread over more than ten and half hours in any day.
Chief Inspector may permit spread over up to 12 hours.
Employment of women: Women workers are not to be allowed or
required to work in any factory except between hours of 6 a.m. and 7
p.m.
These limits may be varied by State Government for any factory or group
of factories. But such variation cannot authorize the employment of any
woman between the hours 10 p.m. and 5 a.m.
Extra wages for overtime: Work in excess of nine hours in any
day or 48 hours in any week done by a worker in a factory is treated as
overtime. For this overtime the worker is entitled to wages at the rate of
twice his ‘ordinary rate of wages’.
In Ordnance Factories, ‘ordinary rate of wages’ per hour is calculated by
the formula (P+D)/200 where P represents the worker’s pay and D
Factory Accounting
30
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represents allowances such as DA, HRA, CCA and Transport Allowance.
200 are taken as the average working hours in a month.
For Piece workers, ‘time rate’ shall be deemed to be the ‘ordinary rate of
wages’.
‘Time rate’ is equivalent to the daily average of their full time earnings for
the days on which they actually worked on the same or identical job
during the month immediately preceding the calendar month during which
the overtime work was done.
In computing the full time earnings, the allowances such as DA, HRA, CCA
and Transport Allowance are included.
Power to make exempting rules: Persons holding supervision or
management or are employed in a confidential position in a factory may
be exempted from provisions relating to working hours and overtime
wages etc.
But no exemption is permitted in case of these persons from the operation
of provisions relating to working hours etc. of women employees.
The State Government is also empowered under the Act to make rules
providing for exemption to such extent and subject to such conditions as
may be prescribed, of adult workers engaged on urgent repairs or work
which must be carried on continuously for technical reasons and so on.
Overall limit of exemptions: There are certain limits beyond
which exemption can not be granted. These limits are as follows:
(a) The total number of hours of work in any day shall not exceed
ten
(b) The spread over, inclusive of intervals for rest, shall not exceed
twelve hours in any day
In order to enable a shift worker to work the whole or part of a
subsequent shift in the absence of a worker who has failed to report for
duty, the limit up to which the exemption may be granted are as follows:
Factory Accounting
31
(c) The total number of hours of work in a week including overtime
shall not exceed sixty
(d) The total number of hours of overtime shall not exceed fifty for
any quarter
Further exemption: To meet the exceptional press of work,
exemption from the operation of provisions relating to daily hours of work,
weekly holiday, interval for rest and spread over may be granted in
respect of any or all of the workers subject to the following conditions.
(a) The total number of hours of work in any day shall not exceed
twelve
(b) The spread over, inclusive of intervals for rest, shall not exceed
thirteen hours in any day
(c) The total number of hours of work in a week including overtime
shall not exceed sixty
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(d) No worker shall be allowed to work overtime for more than
seven days at a stretch and the total number of hours of
overtime work in any quarter shall not exceed seventy-five.
Factory Accounting
32

Idle time payments in

Factories
Idle time payments will be made under the following conditions, at their
ordinarily monthly rates, to workmen who may have become temporarily
surplus for reasons of such nature as specified below and who cannot be
provided with suitable alternative employment in the normal manner:
1. High atmospheric humidity hindering certain operations in Explosive
Factories or unfavourable weather conditions hindering specialized
optical works depending on sunlight.
2. Plant, Furnaces and Transport breakdowns, inspection and repairs
3. Temporary shortage of materials
4. Failure of power supply
5. Temporary shortage of works in highly specialized sections such as
Instruments Repair or Optical Sections etc.
If any necessity, however, arises for idle time payment for causes other
than those enumerated above separate Government sanction will be taken
to meet such contingency. The idle payment will not be admissible on
occasions when it is due to wrongful action or misconduct of the
employees making it impracticable to employ certain classes of workmen.
(Ref: Pages 254 of Procedure Manual)
Factory Accounting
33

Incentive Bonus
Incentive Bonus is paid to essential maintenance workers employed in the
maintenance of plant and services. It is paid as per the following rates: -
For essential maintenance workers attached to Production Section- at
50% of piece work profit earned by the workers in the relevant production
section
For essential maintenance workers not attached to Production section- at
50% of the average piece work profit earned by the piece workers in the
whole factory.
Maintenance workers employed outside the factory and unskilled workmen
employed on maintenance work, whether attached to production section
or otherwise, are not covered under this scheme.
Factory Accounting
34

Overtime Wages
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(Extract of G.I., M of D, F. No. 14(1)/97/D (Civ-II) dated 1st July, 1998)
(i) The employees of Industrial Establishments who are “workers”
within the meaning of the Factories Act, 1948, are entitled to
payment of Overtime Allowance in terms of Section 59 of the Act
on the basis of the revised pay scales. As already stated in the
Min. of Defence OM No. 14(2)/87/D (Civ .II) dated 11.9.87 and
OM No. 14(1)/86/D (Civ. II) dated 14.1.88, they are entitled to
Overtime Allowance only at the time rate, for the work done
between the prescribed working hours and upto 48 hours a week.
(ii) Those categories of “Workers” of Industrial Establishments who
come within the scope of Section 64 of the Factories Act covering
only those employees who are under the rules framed by the State
Governments under Section 64 (1) of the Factories Act, 1948 or
who are declared to be workers by the Inspector of Factories
under Section 64(1) of the Factories Act, 1948, are entitled to
payment of Overtime Allowance on the basis of the revised pay
scales but subject to the conditions that their basic pay in the prerevised
pay scales is not more than Rs. 1600/- p.m. notionally
determined. They are entitled to OTA at time rate as explained in
sub-para (i) above for the work done between the prescribed duty
hours and up to 48 hours in a week.
(iii) Those categories of “Workers” who come within the scope of
Section 64 of the Factories Act and whose basic pay is more than
Rs. 1600/- p.m. in the pre-revised scales are eligible for OTA in
terms of Ministry of Defence OM No. 14(2)/76/D (Civ. II) dated
25.6.1983. Accordingly, OTA will be paid to them on the basis of
old pay scales notionally determined. They will also be paid OTA
for the overtime work done between the prescribed duty hours
and up to 48 hours a week only at time rate calculated on the
basis of old pay scales notionally determined. They will be entitled
to OTA at double the time rate calculated on the basis of old pay
scales notionally determined, for the work beyond 48 hours under
Factory Accounting
35
the orders dated 25.6.1983 referred to above. This will not entitle
anyone who is not covered by 25.6.1983 orders to claim OTA.
Provisions of the Factories Act, 1948 with regard to
overtime wages
Section 59:
“59. Extra wages for overtime:- (1) Where a worker works in a factory for
more than nine hours in any day or for more than forty-eight hours in any
week he shall, in respect of overtime work, be entitled to wages at the
rate of twice his ordinary rate of wages.
(2) For the purpose of sub-section (1), “ordinary rate of wages” means
the basic wages plus such allowances, including cash equivalent of the
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advantage accruing through concessional sale to workers of food grains
and other articles, as the worker is for the time being entitled to, but does
not include a bonus and wages for overtime work.”
Who is a “worker”?
Section 2 (l) “worker” means a person employed, directly or by or
through any agency (including a contractor) with or without the
knowledge of the principal employer, whether for remuneration or not, in
any manufacturing process, or in cleaning any part of the machinery or
premises used for a manufacturing process, or in any other kind of work
incidental to, or connected with the manufacturing process, or the subject
of the manufacturing process, but does not include any member of the
armed forces of the Union..
Section 64 (1)
The State Government may make rules defining the person who holds
positions of supervision or management or are employed in a confidential
position in a factory, or empowering the Chief Inspector to declare any
person, other than a person defined by such rules, as a person holding
position of supervision or management or employed in a confidential
position in a factory if, in the opinion of the Chief Inspector, such person
holds such position or is so employed and the provisions of this Chapter,
Factory Accounting
36
other than the provisions of clause (b) of sub-section (1) of Section 66
and of the proviso to that sub-section, shall not apply to any person so
defined or declared:
Provided that any person so defined or declared shall, where the ordinary
rate of wages of such person does not exceed the wage limit specified in
sub-section (6) of Section 1 of the Payment of Wages Act, 1936, as
amended from time to time, be entitled to extra wages in respect of
overtime work under Section 59.
Overtime Pay under Departmental Rules:
For work in excess of normal working hours and up to 9 hours on any day
or 48 hours in any week, overtime will be paid at the rate prescribed in
the Departmental Rules. (Normal working hours for Ordnance Factories
are 44 ¾ hours a week at the rate of 8 hours per day for five days from
Monday to Friday and 4 ¾ hours on Saturday.) For calculating overtime
pay under Dept. Rules, Basic Pay, Dearness Allowance, Special pay,
Personal pay, Pension (to the extent taken for fixation of pay) in the case
of re-employed pensioners and City Compensatory Allowance shall be
taken into account. House Rent Allowance, Conveyance Allowance,
Travelling and Daily Allowances, Clothing Allowance, Uniform Allowance,
Washing Allowance, Children Education Allowance shall not be included1.
OT wages under Factories Act
For the purpose of calculation of Overtime Wages under Factories Act,
1948, the term ‘ordinary rate of wages’ has been interpreted to include
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Basic Pay, Dearness Allowance, City Compensatory Allowance, House Rent
Allowance and Transport Allowance. Other allowances are not included in
‘ordinary rate of wages’.
Whether HRA to be included in ‘ordinary rate of wages’ for
calculation of OT wages under Factories Act in case of
employees who are provided with Government
accommodation and are not in receipt of HRA?
1M of D Corr. No. 14(5)/64/D (Civ-II) dt. 21.10.65 Circulated under DGOF No. 525/A/A/(VI) dt.
18.11.65.
Factory Accounting
37
In Govind Bapu Salvi & ors. V. Vishwanath Janardhan Joshi & ors. (1995)
29 ATC 103 SC, the Hon’ble Supreme Court has held as follows:
“The language of this section (Section 59 (2) of the Factories Act) is very
clear. It says that the ordinary rate of wages which is referred to in subsection
(1) of Section 59 means basic wages plus such allowances…as
the worker is for the time being entitled to, but excludes bonus and
wages for overtime work. (Words in parenthesis and emphasis added).
3. Admittedly, the appellants (Govind Bapu Salvi & ors) are not entitled to
the payment of house rent allowance since they are occupying the official
quarters. Hence for calculating the overtime wages, the house
rent allowance cannot be taken into account”. (Words in
parenthesis and emphasis added).
The question has therefore been answered in the negative.
Overtime Wages to Piece Workers
The following methods of calculation and payment of overtime to the
piece workers have been sanctioned: -
(i) Piece Workers under P & A Regulations, Pt. I
(a) No overtime will be admissible for working overtime in day shift. But
for the purpose of distribution of P.W. profits, the time wages element
in respect of overtime will be determined at the rate of P/200 per
hour, where P represents the monthly basic pay or the monthly basic
pay and dearness pay where admissible.
(b) An extra half hour pay calculated at the hourly rate of 1/200 of the
monthly basic pay or the monthly basic pay and dearness pay where
admissible, for every hour of systematic overtime work on the night
shifts in addition to the piece work earnings. [This is called ‘Night Duty
Bonus’].
(ii) Piece workers under the Factories Act.
For each hour of overtime in excess of 9 hours on any day or 48 hours in
a week a piece worker will get 1/200 of the monthly basic pay plus 25%
Factory Accounting
38
of basic Pay plus twice all allowances. In other words, if P represents the
monthly basic pay and D stands for all allowances such as DA, HRA, CCA
(and Transport Allowance) overtime for each hour will be
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P/200 + .25 P/200 + 2D/200
OR
(1.25 P + 2D)/200
Payment of overtime under Departmental Rules to
workmen who are put partly on Piece Work and partly
on Piece work in a wage period
2“The question regarding payment of overtime allowance under
Departmental Rules to a workman who works partly as a piece worker and
partly as a Day worker during a wage period has been under examination
of the higher authorities for some time past.
As now intimated by the CGDA, New Delhi, the Ministry of Defence
(Fin/AG) in consultation with Chief Labour Commissioner (Central), New
Delhi has clarified the position as under: -
“ –as per the provisions of the Factories Act O.T.A. is payable even for
piece rated workers. Sub-section (3) of Section 59 provides that where
any worker in factory are paid on a piece rate basis, the time rate shall be
deemed to be equivalent to the daily average of their full time earnings
for the days on which they actually worked on the same or identical job
during the month immediately preceding the calendar month during which
the overtime work was done and such time rate shall be deemed to be the
ordinary rate of wages of these workers.
The above principle may be followed for the purpose of paying overtime
to piece rated workers for the days they work overtime.”
In view of the position explained above piece workers who are put on day
work for part of wage period may be paid OTA under Deptt. Rules, only
for the period he is on day work.
2 The Chief Controller of Accounts (Fys), Calcutta letter No. Pay/Tech-II/183 dated 18th Nov. 1991.
Factory Accounting
39
The time wage for the period a piece worker works as a day worker
should continue to be calculated @1/N-S vide Min. of Def. New Delhi
Corrg. No. 15(3)/67/D(Civ-I) dated 16.4.68 (AT/62 dated 5.6.68)”.
Inclusion of Transport Allowance for the purpose of OT
Wages under Section 59 of the Factories Act
Ministry of Labour3 has clarified as follows:
“Clause (2) of Section 59 of the Factories Act, 1948 provides that
“ordinary rate of wages” means the basic wages plus such
allowances, including the cash equivalent of the advantage
accruing through the concessional sale to workers of foodgrains
and other articles, as the worker is for the time being entitled to,
but does not include a bonus and wages for overtime work.
2. Since the transport allowance has not been excluded from the
compensatory allowance etc. under clause (2) of the Section 59 of
the Factories Act, 1948 and hence, Transport Allowance should be
included in the basic rate of wages for purpose of computation of
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OTA.”
3 Ministry
of Labour U.O. No. S-25025/2/97-ISILIL, dated 12.6.2000 forwarded under OFB letter
No. 525/O/A/A/(VI) dated 03.8.2000
Factory Accounting
40

Night Duty Allowance

Duty in night shifts is considered to be somewhat injurious to health as
this kind of working is against the rule of nature. Scientific studies have
established that those who perform night duties suffer some deterioration
in health. It is perhaps to compensate this loss that the Night Duty
Allowance is paid to the employees who are deployed to work in night.
Presently Night Duty Allowance is being paid to all employees drawing a
basic pay up to Rs. 2200 per month and performing duty between 22.00
hours and 6 hours. Wherever the working hours have been arrived at
after taking into account the night weightage factor, no further
compensation in the form of Night Duty Allowance is admissible. A
uniform weightage of 10 minutes is given for every hour of night duty
performed. Night Duty Allowance is computed as per the following
formula:
(1) For continuous and intensive duty
Rates are calculated on the basis of current rates of pay including DA
& CCA divided by the number of working hours in a month.
(2) For intermittent and excluded Class III
2/3 of the rate worked out at (1) above.
No Night Duty Allowance shall be admissible during overtime hours, if any,
falling within the Night Duty hours.
Night Duty Bonus
This is payable on the departmental overtime (i.e. systematic overtime up
to 9 hours a day or 48 hours a week beyond normal working hours) done
during night.
The rate is half hour pay (Basic Pay including DA and CCA) for each Night
Duty Bonus hour.
Factory Accounting
41

Piece Work System

Types of Labour Employed in Factories
Apart from their trades and grades, the workmen in Ordnance Factories
can be classified into the following three categories:
(1) Day Workers i.e. men who are paid their wages irrespective of the
work done provided they are present in the Factory for the entire
working period.
(2) Piece Workers i.e. men engaged on work carrying piecework rates.
Piece Workers either works individually or in gangs.
(3) Trainees i.e. those who are undergoing training in skilled trades.
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(Note: The term ‘workman’ is not synonymous with the term ‘worker’ used
in the Factories Act. A man is not necessarily a worker, nor is a ‘worker’
necessarily a workman. All men borne on the Industrial Establishment of
the Factories are treated as workmen. )
Day Work and Piece Work Cards-Issue of:
The Section Foreman will issue Day Work and Piece Work Cards in the
prescribed forms to workmen showing the work to be done either by an
individual or by a gang. Day work and Piece work cards may, if necessary,
be returned to the Section Officer where they may be held for safe
custody and for ready reference, but must at all times be readily
accessible to the workmen concerned. These cards will be checked by the
Section Foreman with the Manufacture Warrants.
In the case of Day workers who are continuously employed on the same
class of work no cards are necessary but a list of work orders on which
they are employed is furnished by the Section concerned, to the Accounts
Office.
Factory Accounting
42
Piece Work Cards-Completion of:
In the case of Piece workers the number of articles or operations
completed will be entered in the card by the Shop concerned and the
number as passed for payment initialled by the employees specially
authorized to inspect and pass the work. If only a portion of the work on a
card has been presented for payment at the end of the month, the
balance will be brought forward on to a new card, necessary amendments
being made on the records of cards maintained, on the Manufacture
Warrant.
In those Factories in which although the inspection for final operation is
invariably carried out by the Inspectorate Staff, Piecework cards for
intermediate operations may be passed finally by the Factory Foreman or
Asst. Foreman for payment purpose. In all such cases, the Factory Works
Inspection Section may, if considered necessary, be delegated this duty,
although the Inspector still reserves the right to carry out any stage
inspection, he considers desirable.
Belated Payments:
Belated payments for work done in previous months are ordinarily
inadmissible. Cards will be issued to workmen when work is given out and
these cards will be the basis on which wages will be paid. If at the time of
payment a workman discovers that he has not been paid for certain work
he has done during the past month he will at once report the matter to
the General Manager and after investigation any amount due will either be
paid to him on a Supplementary Pay Roll or included in the wages for the
following month according as found necessary by the General Manager.
Beyond this no belated claim will be admitted unless supported by a
written order of the General Manager recording the reasons for allowing
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the belated claim.
Timely despatch of Piece Work Cards:
Since rapid costing mainly depends upon the Data furnished on the Day
and Piece Work cards being made available to the Accounts Office at the
shortest possible intervals it is important that the amount of work given
out on a card should be restricted. Endeavors should be made to work on
Factory Accounting
43
a weekly basis to avoid rush of work at the end of month which delays
alike the preparation of wage bills and compilation of cost. The Factory
will pass on to the Accounts Office all the work cards for completed work
at frequent intervals in regular flow and without any delay. These intervals
will depend upon local conditions and may be fixed by the General
Manager in consultation with the Accounts Officer.
Piece Work System:
The Standard authorized system of payment of production labour in the
Ordnance Factories is piecework. Until the piecework system has been
established payment will be made on day work basis. The Factory
Management will work out piece work rates giving due consideration to
the Wages of Workmen of the particular Skill required, the time required
for the operation, the rest interval, tool sharpening etc.
Provisional Piece work Rates:
In the case of non-recurring jobs i.e. jobs for which quantities are small
and further orders are not anticipated, the piece work rates will be fixed
on the basis of estimates prepared by Rate fixers and approved by the
Divisional Officer of the Section concerned.
On a work of recurring nature, the establishment of manufacture will be
taken in hand by suitable day Workers, if available. If not, the work may
be taken in hand on provisional piecework rates based on estimated
timings.
When Manufacture of a component has been established on day work at a
reasonable level, time study will be made of operations concerned and
adjustment made as necessary to estimated timings. All these rates will be
treated as provisional and shall be finalized within a period of 3 Months of
commencement of the work at the provisional piecework rate. Piecework
rates will be fixed in a manner, which will ensure that they are really fair
to both the employer and the employee.
Piece Work Rates - Alteration to:
Factory Accounting
44
Piecework rates once finalized should not be altered unless there is a
change in the method of manufacture or unless any other special
circumstances arise.
Piece Work Rates - Post-Audit Of:
Whenever a new piece work rate is fixed or the existing rate is revised by
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the Management, the Accounts Officer will see in post -audit whether the
new or the revised rate is financially equitable with reference to the data,
such as the rate of workman, skill required, operation time, rest intervals
and other allowances etc. which will be furnished to the Accounts Officer
by the Management.
Piece Work Bonus:
An allowance of 25% will be added to all rates to cover Piece Work Bonus
(profit) allowed to Piece Workers.
Definition of P.W. Profit and loss:
Profit or loss is the difference between the earnings on piece work rates
and time earnings, i.e. the latter category being the wages the men would
have earned had they worked on assigned monthly rates of pay.
(Important Note: The system of Piecework in Ordnance Factories has
undergone some changes. For the latest instructions, please see the write
up on Piecework System).
Record of Profit or Loss:
The Accounts Officer will maintain a register in which the profit or loss of
each man will be recorded. Abnormal cases of profit or loss would be
brought to the notice of the General Manager.
Non-recurring Rates:
Ordinarily rates are provided for all types of operations considered
necessary on a particular job in the Standard Estimates. In exceptional
cases, however, after a job is put on operation some additional operation
Factory Accounting
45
or material may become necessary (over and above the provision in the
Standard Estimates). Additional Labour/Material in such cases my be
sanctioned through Non-recurring Rate Forms for the purpose of covering
some sundry job of a non-recurring nature required, such as to bring the
material to the correct size or shape or to rectify the factory forgings or
castings or for similar jobs of non-recurring nature. The use of such nonrecurring
rates should be restricted to the absolute minimum and may be
resorted to only for special reasons to be recorded in writing.
Work Cards-How dealt with by Accounts Office:
Immediately on receipt, Day Work and Piecework Cards will be entered in
a simple register maintained for recording the batch totals in respect of
receipt and despatch of cards. Before their despatch to the next section
for further action, the cards will be sorted with reference to Work Orders
and Manufacture Warrants to which these cards pertain and posted in the
Warrants. The Cards after pricing, posting etc., should be sent,
accompanied by the prescribed form, to the ‘H’ Section. The ‘H’ section
will intimate the amount to be paid to each gang in the case of gang piece
worker and each individual in the case of individual piece worker. The
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entered in the work record of each gang and distributed proportionately
among the men, with reference to their time earnings. The amounts
intimated by the ‘H’ section against individual piece workers will be
entered against their names in the Accounts Office record.
Piece Work System- Salient features
(1) Piecework rates would be correlated to the minimum of the revised
pay scale (as recommended by 5th Central Pay Commission and
accepted by the Govt.) of worker deployed as against the existing
correlation to the minimum of the pay scale of each grade specified
in job estimates.
(2) The production warrants will be issued in terms of Time as against
in terms of rate per unit under the existing system (including 25%
built-in incentive).
Factory Accounting
46
(3) The difference between the actual basic pay of a worker and the
minimum of his scale of pay will be paid to him as a separate
element called ‘incremental pay’.
(4) The existing ceiling of 75% on piecework profit based upon actual
time wages of a worker as per his pay in the revised scale will
continue.
Details in Warrants
Existing Warrant
Contains the following
information
Revised Warrant to
Contain the following
information
Operation No. Operation No.
Nomenclature of operation Nomenclature of operation
Section Code Section Code
Trade Trade
Grade Grade
Number of men Number of men
Rate per hour Hours per quantity
Hours per quantity Quantity for the Operations
Quantity for the Operations Unit of quantity
Unit of quantity Total Hours for Warrant
quantity
Rate for Warrant Quantity
Value in rupees
The job cards against which labour payment will be claimed will show only
the time (and no money) for the work done.
The calculation for profit % will be as below:
Profit % = [(Total output hours/total input hours as per attendance)-1] x
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100
Time wages of the worker will be calculated as per the existing system.
The profit element will be calculated by multiplication of profit % with
time wages.
Factory Accounting
47
In the event of profit % is negative provision of guaranteed pay will be
used as per the existing system.
Factory Accounting
48

Guaranty of actual basic time

wages of a Piece Worker
"Sub: Revision of Ceiling on Piece Work Profit in the Ordnance Factories4
I am directed to refer to this Ministry's letter of even number dated 19th
July 1983 on the above subject and to state that in supersession of
previous orders contained in this Ministry's letter No.
834/A/A2778/76/II/D(Projects) dt. 19.7.76, the President is now pleased
to decide that a piece worker in the Ordnance Factories covered by Piece
Work Incentive Scheme will be guaranteed the actual basic time wage in
his respective pay scale for the period the earning of the worker during
the period of his duty fall below the actual basic time wage applicable for
that period. By way of illustration, if a semi-skilled worker in the pay scale
of 210-290 is entitled to pay of Rs. 222/- as his basic pay having earned
three increments, his basic wage guaranteed to him would be Rs. 222/-
for the period of his piece work earning fall below this rate of pay.
Similarly, in the case of a skilled worker in pay scale of 260-400, who has
earned three increments and had reached the stage of Rs. 278/- his basic
guaranteed wage would be Rs. 278/-. If, however, it is found that a piece
worker consistently stands in need of the above guaranteed minimum, the
reasons for the same should be investigated and if the need arose due to
his inefficiency, the question of taking necessary action on this ground
would be considered by the competent authority."
4M of D letter No. 12(10)81/D(Project-I) dt. 6.4.84 received under OFB letter No. 834/A/A dt.
2.5.84. (MPF Order Part I No. 247 dated 27.6.84).
Factory Accounting
49

Injury Leave
As per Article 291 of CSR subordinate employees, in the absence from
work on account of injuries received under the course of their duty, may
be allowed full pay (leave) for one month and thereafter half pay (leave)
for three months.
For the persons to whom Workmen’s Compensation Act, 1923 applies, the
grant of leave under this Article shall be subject to the condition that the
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leave allowance payable shall be reduced by the amount of any
compensation payable under Section 4(1) (d) of the said Act.
M of D’s decision
(i) For absence from work on account of injuries received in the
course of duty, Article 291 of CSR provides for grant of full pay
for one month and thereafter half pay for three months subject
to the conditions specified in that Article in respect of men to
whom the whom Workmen’s Compensation Act, 1923 applies.
Combination of any other kind of leave (except casual leave)
with injury leave under Article 291 of CSR is also permissible.
(ii) The provisions of Article 291, which cater for subordinate
employees, are applicable not only to those who come within
the purview of the Workmen’s Compensation Act but also to all
categories of staff other than Gazetted officers and in their
cases also, combination of any other kind of leave as indicated
in (i) above with injury leave provided for in that Article is
permissible.
(iii) In the case of employees governed by the Workmen’s
Compensation Act, they may have the option to avail of any
leave which may be normally due to them in preference to the
leave provided for in Article 291 of CSR, particularly after the
first month on full pay without their right to be governed by the
Workmen’s Compensation Act being in any way affected by the
exercise of such option.
Factory Accounting
50
(iv)Since leave salary in respect of leave (other than the injury
leave under Article 291 of CSR) which is debitable to the leave
account of the workmen cannot be treated as compensation in
terms of proviso (a) to Section 4 (1) (a) of the Workmen’s
Compensation Act 1923, such leave salary should be paid to the
disabled workman.
Note: It is clarified that the injury leave allowance payable under Article
291, CSR (not being a compensation provided for in the Workmen’s
Compensation Act) should not be deducted from the compensation
payable under the Workmen’s Compensation Act. However, by virtue of
the specific provisions of Article 291, CSR, it will be legally permissible to
deduct from the leave allowance payable under the said Article the
amount of compensation payable only under Section 4 (1) (d) of the Act
and not any lump sum compensation that may be payable under clauses
(a) to (c) of Section 4 (1) of the Act.
Provisions of Article 291 modified
“2. It has been decided in modification of the provisions of Article 291,
Civil Service Regulations that hospital leave may be granted up to three
months on full pay or six months on half pay during a period of three
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years to all Group ‘D’ Government servants and also to those Group ‘C’
Government servants whose duties involve handling of dangerous
machinery, explosive materials, poisonous drugs, etc. or the performance
of hazardous tasks.
3. Industrial Staff will also be entitled to hospital leave in the same
manner as indicated in para 2 above.
All categories of staff who were originally entitled to the concession and
also Group ‘D’ Group ‘C’ Government servants mentioned in paragraph 2
above will be entitled to hospital leave at the revised scale provided for in
paragraph 2 above.”
Restrictions on quantum of leave removed
Factory Accounting
51
It has been decided5 that the categories of the Defence Civilian eligible for
this kind of leave (hospital leave) will be entitled to hospital leave without
any restriction on the quantum of leave. This kind of leave can be granted
for such period as is considered necessary by the authority competent to
grant it.
5 See M of D OM NO. 11(6) 67/5255/D (Civ –II) dt. 15.5.67.
Factory Accounting
52

Productivity Linked Bonus

Salient features
Original Scheme introduced by M of D (Department of Defence
Production) O.M. No. 23(1)/80/D (PA) dated 7.4.1980
1. The Scheme shall be called the ‘Productivity Linked Bonus to
Civilian Workers in Defence Production Establishments’.
2. The Scheme shall cover the following categories of employees in
service on or after 1st April, 1979:-
(a) All Civilian Employees of Ordnance Factory Board working in
Ordnance Factories, OEF Group of Factories, Ordnance Factory
Board Headquarters (including Ordnance Factory Cell, New
Delhi) and OEF Group Headquarters, Kanpur, excluding teaching
staff in the schools maintained by factories.
(b) All Civilian Employees of Heavy Vehicle Factory, Avadi, Madras
excluding teaching staff employed in the schools maintained by
Heavy Vehicle Factory.
(c) All Civilian Employees of the Directorate General of Inspection
excluding those working in (a) Headquarters Establishment at
New Delhi and (b) teaching staff in the schools (if any)
maintained by DGI Organization.
(d) All employees of the Organizations of the Controller of Accounts
(Fys) and the Chief Internal Auditor (Fys) but excluding those
employed in cells looking after R&D establishments exclusively.
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(e)All employees working under the Controller of Finance (Fys.)
3. All categories of Civilian Employees mentioned in para 2 above
comprising industrial, non-industrial, supervisory personnel, including
Gazetted Officers excepting those specifically excluded drawing wages
upto and including Rs. 1600/- per month will be eligible for bonus. The
Factory Accounting
53
maximum amount payable will be restricted to the amount admissible for
wages of Rs. 750/- per month but not exceeding Rs. 1600/- per month,
bonus will be calculated as if the wages were Rs. 750/- per month.
4. The term ‘wages’ for this purpose will be and include basic pay,
special pay, dearness allowance and additional dearness allowance but will
not include any other compensatory allowance such as house rent
allowance, city compensatory allowance and Children Education allowance
etc.
5. For the purpose of payment of bonus. “Day’s wages” will mean
wages at 1/30 of monthly wages calculated at the rate of pay and
dearness allowance including additional dearness allowance as on 31st
March of the year.
6. Bonus will be payable to all regular, whether permanent or
temporary, employees who have completed a minimum service of six
months during the year. Casual daily employees, if any, will be paid bonus
only if during any calendar year, they have put in 240 days service and
are in service on the 31st of March.
7. The productivity index and the quantum of bonus payable for any
year will be calculated by the Department of Defence Production as per
the agreed formula indicated below:
Formula for calculation of bonus:
(a) The formula for calculation of bonus will be X/Y where X
represents standard manhours notionally required to achieve the
total physical production for any year and Y represents the total
manhours (including overtime hours) actually put in by all
categories of eligible employees. This formula ensures
determination of productivity as distinct from production.
(b) The year 1977-78 will be taken as the base year and X/Y as 100.
Quantum of bonus payable:
Factory Accounting
54
Where the value of factor X/Y in any year is identical to the base year,
bonus equivalent of 25 days wages will be admissible. Where the value is
less than 100% but more than 90% of the base year for every fall of
1.5% in productivity, bonus payable will be reduced by one day’s wages
and where the value falls below 90% no bonus whatsoever will be
payable. Where the value exceeds 100%, for every raise of 2%, extra
payment at the rate of one day’s wags will be admissible provided that the

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payment for more than 25 days will become due only when the value
exceeds the index by 4%.
8. The formula enunciated in the Scheme will be applied for the
performance relating to the financial year 1979-80 and the bonus payable
for the productivity achieved in 1979-80 will be computed on that basis.
9. The Scheme will be reviewed after reviewing its working for three
years.
10. The grant of Productivity Linked Bonus is intended to provide
substantial motivation towards achieving higher productivity by way of
increased output by the employees and improved quality of service. The
Government hopes that the employees will devote and dedicate
themselves by greater vigour and energy than heretofore in the service of
the nation.
Changes in the scheme
Admissibility
Productivity Linked Bonus is admissible at present to all non-Gazetted
employees without any pay limit.
Quantum of Bonus
Every year PLB is granted as equivalent to emoluments for certain number
of days for the relevant financial year.
Emoluments
Factory Accounting
55
'Emoluments' include basic pay, special pay, personal pay, stagnation
increment, deputation (duty allowance), dearness allowance, special
allowance and training allowance paid to faculty members of training
institutions. (Other allowances not included).
Maximum limit
Restricted to that admissible for the emoluments of Rs. 2500/- per month.
Suspension
Period excluded for calculation for the year, but will be taken into account
if the period of suspension is regularized as duty.
Average Emoluments
Quantum of PLB for the number of days declared every year to be
calculated on the average emoluments drawn for the financial year, i.e.
emoluments for April to March next.
Pro rata PLB
If the employee leaves service on resignation/retirement etc. during the
year, pro rata PLB to be calculated for the number of days in service.
Rounding off
The amount of PLB calculated to be rounded to the nearest rupee.
Factory Accounting
56

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Payment of Wages
Under the Payment of Wages Act, 1936, the wages for any wage period
(calendar month, in case of Ordnance Factories) are payable as under:
If the factory employs 1000 or
more workers
Before the expiry of the 10th day
following the last day of the wage
period
If the factory employs less
than 1000 workers
Before the expiry of the 7th day
following the last day of the wage
period
It is due to this stipulation in the Payment of Wages Act, 1936 that the
wages to workers are paid either on 10th or 7th of every month.
Absentee Payment Register
The factory in a register called Absentee Payment Register will record
particulars of all absentees. This will be regularly audited every month by
the Accounts and ensure that the entries recorded therein are agreed as
per the disbursement certificate.
Absentees on the date of payment of wages are paid on the absentees'
payment day.
Agreement Form of Labour (AF L)
AO will prepare AFL in triplicate transcribing the total amount passed for
payment. Two copies will be forwarded to Factory Management who will
return one copy duly completed by giving particulars of amount actually
paid, unpaid wages, recoveries, deductions etc. All supporting schedules
will also be forwarded along with the AFL. The due date for submission of
AFL is 10th of the second month following that to which the transaction
pertains.
Disbursement Certificate (DC)
Factory Accounting
57
The Factory prepares a monthly Disbursement Certificate for IEs who are
paid out of advances obtained from the Local Accounts Officer. The total
amount passed for payment in the Muster Rolls, recoveries made, net
amount paid and the actual amount disbursed are shown in the payment
side.
The advances received from LAO are shown in the receipt side. The
undisbursed wages are recorded on the payment side of the DC and both
sides balanced. The DC should be sent to AO on or before 10th of the
second following along with TR for the undisbursed amount.
The AO will verify the details of DC with reference to AFL, Schedules and
other documents furnished in support. Rent scheduled will also be
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checked with the rent bills.
Factory Accounting
58

Accounting of Stores
Definition of Stores:
The term 'stores' include (1) Materials used in the Factory, (2)
Manufactured Products including components or processed Materials
produced in the Factory, and (3) Miscellaneous Items of trade supply e.g.
electricity and water for manufacture purpose.
How Materials are issued to the Shops:
Storeholders will not issue any Materials for use in the Factory without
Material Demand Note signed by the person authorised to requisition such
stores.
Separate Material Demand Notes will be prepared for each description of
material for each job.
The Material Demand Notes will be prepared in duplicate and submitted to
the Storeholder with Material Warrant on the authority of which the
Materials are requisitioned.
The latter will enter all issues of Material made by him in the Material
Warrant after verifying that the quantity demanded is within the quantity
authorised on the Material Warrant and will return one copy of the
Material Demand Note together with Material Warrant to the Demanding
Section.
The Demanding Section will return the copy of Demand Note to the
Storeholder duly receipted, who will in turn, pass it on to the Accounts
Office after the issue has been entered in the appropriate Bin Cards and a
suitable Sl. No. has been assigned.
Alteration to Demand Note:
The Storeholder may alter the quantities shown on the Material Demand
Notes if necessary in order to conform to the quantity or type of stores
Factory Accounting
59
actually issued. He will attest the correction and enter the altered quantity
only in the relative Material Warrant.
Return of stores to the Storeholder:
Any defective or surplus Material will be returned to the Storeholder on
Material Return Notes prepared in duplicate and the Material Warrant
concerned. The Storeholder will enter the No. assigned to the Material
Return Note and the stores in the Material Warrant and will return the
Material Warrant to the returning Section and pass on the receipted copy
of the Material Return Note to the Accounts Office after making necessary
entries in the Bin Card.
Alteration to Return Notes:
The Storeholder may, if necessary, alter the quantity shown on the Return
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Notes provided the quantity actually received is less than quantity shown
on the Return Note. He will attest the corrections and will enter the
altered quantity only on the Material Warrant.
Inspection of Returned Stores:
Where necessary, Materials returned to the stores will be examined under
administrative arrangement for sentence as to the category viz.
serviceable, repairable or unserviceable under which the stores will be
taken on stores charge. Defective Materials will be kept separate pending
sentence.
Scrap-How returned to Stores:
Scrap will not be allowed to accumulate in the Shops. All scrap will be
returned to the Stores with Material Return Notes in duplicate
accompanied by the relative Material Warrant, in the cases where the
scrap can be definitely allocated to a particular job. The procedure
described in Rule 25 (FAR) will be followed in such cases.
Scrap that cannot be allocated to any particular warrant will be returned
on Work Order 02/00358/00.
Factory Accounting
60
Manufactured Stores-Accounting of:
All manufactured products (including components) will be handed over to
the charge of the Storeholder together with necessary copies of
Inspection Note (or Departmental advice) and supported by production
vouchers, if necessary. One copy of Inspection Note will be furnished to
the Accounts Office duly signed. Stores intended for stock will be brought
on to the Bin Card and the supporting production voucher will be allotted
a stores series receipt voucher number.
Stores- Issue of:
No Materials will be supplied from a Factory to Military or Non-Military
Government Departments except on the authority of the DGOF, a copy of
whose order will be sent to the Accounts Office. Materials may, however,
be issued from one Factory to another on the authority of the General
Manager of the Factory endorsed on Inter-Factory Demands (IFD) in
duplicate. In the case of all such supplies the required number of copies
of proper issue vouchers will be prepared by the Storeholder for pricing by
the Accounts Office. 3 copies of these vouchers will be sent to the
consignee who will return one copy duly receipted. The receipted copy
will be passed on the Accounts Office to note and for raising debits where
necessary.
Stores which are ordinarily manufactured in Factory will not be issued
direct from stock. They will be drawn on Demand Notes to the Work Order
concerned and issues treated in the same way as issues from
manufacture.
Demand and Return of Manufactured Components for
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purpose of assembly:
In Factories working on the Except System components manufactured in
the Factory are drawn for the purpose of assembly on Red Material
Demand Notes and corresponding entries are made in Material Warrant in
Red Ink. Red Return Notes are utilised for return of manufactured
components to the components store.
Factory Accounting
61
Red Return Notes are also utilised for return of surplus components drawn
on Red Demand Notes, to component stores.
Stock taking of Semi-stores:
At the end of every financial year actual stock will be taken by the Factory
of the un-used Material and part finished work, full lists being made of all
articles found showing the stage of manufacture each has reached and
the Extract and Work Order and Warrant against which the manufacture
has been undertaken. The lists which will be prepared separately for each
Shop will be forwarded to the Accounts Officer who will as far as
practicable verify that the quantities of un-used stock and part finished
work agree with the quantities that should exist in accordance with the
accounts received.
Semi-stores-Valuation of:
The articles on the semi-list will then be valued by the Accounts Officer in
labour and material. Where they have been made of Piece Work the
wages value given to each article will be the total piece work price of the
operation which has been performed upon it. The value of any operation
done on the day work will be estimated. Necessary additions will be made
to the wages on account of shop charges-"POWER AND MACHINERY AND
NON-PRODUCTION AND FIXED CHARGES". The value of Materials will be
worked out and "Stores Indirect" charges will be added to it.
(This write up has been prepared on the basis of
"Factory Regulations" issued in the year 1969)
Factory Accounting
62

Accounting of overheads
Overhead expenses:
While the direct labour and direct material charges are allocated to the
jobs concerned and included in the cost cards, the indirect expenditure of
the Factory is allocated in another suitable manner. The indirect
expenditure otherwise known as the Overhead Expenses is divided into
the following two classes.
(1) Fixed Overhead Expenses
(2) Variable Overhead Expenses -comprising of:
(a) Power and Machinery Charges
(b) Non-productive charges
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(c) Store indirect charges.
Variable Overhead Expenses:
Variable Overhead Expenses comprise items of overhead expenditure,
which generally vary in sympathy with the load on the Factory, though not
necessarily in direct proportion. The Variable Overhead Expenses are
detailed under the 02 series of the syllabus of Work Orders Part I.
Fixed Overhead Expenses:
The Fixed Overhead Expenses are items of Overhead Expenditure which
do not mainly depend on the volume of manufacture (load) but generally
remain constant irrespective of the load involved. The items, which fall
under fixed overhead expenses, are detailed under the 01 series of the
Syllabus of Work Orders Part I.
Overhead Expenses-Nature of:
Overhead expenses, whether fixed or variable, may be incurred either in
the form of labour or in the form of material or both. There are also
certain miscellaneous items of overhead expenses which, however, do not
Factory Accounting
63
come under either of these two categories and are, therefore, classified as
"Other Miscellaneous Charges".
Overhead Expenses-Departmentalisation of:
For the purpose of allocating overheads the first step is their
departmentalization. In other words, the overhead expenses whether
fixed or variable pertaining to each Shop or Group of Shops in the Factory
are collected together so that overhead charges for each Shop may be
charged off to the output of that particular Section or group of Sections.
To facilitate the collection of the expenditure under fixed and variable the
last two digits of the 01 and 02 series of Work Order Nos. are designed to
show the Shop or Group of Shops for which the expenditure is incurred.
Overhead Expenses-Allocation of:
The total variable indirect expenditure for the Factory plus such proportion
of the fixed overhead expenditure as is chargeable to the output has to be
charged to the outturn of the Factory. For this purpose the overhead
expenditure pertaining to any production shop is charged to the
production of that shop during that period. It is also necessary that the
overhead expenditure for the same period pertaining to the Service Shops
should also be charged into the cost of outturn. For this purpose the
overhead expenses for the Service Shops are allocated to the productive
shop in proportion to the service rendered by the former to the latter (or
on any other pre-determined basis) and added to the overhead expenses
of the latter by means of a step ladder.
Variable Overhead Expenses:
Variable Overheads of any Shop comprise of-
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running of machinery and Machinery Charges.
(2) The items, which are general in character and are incurred for
the benefit not only of machine labour but also of hand labour,
are called "N.P. Charges" or Non-Productive Charges. The former
Factory Accounting
64
are debitable only to jobs which have been processed on the
Machines while NP Charges are debitable to all jobs done in a
particular Shop.
(3) Another item of variable overhead expenses is "Stores Indirect
Charges" which comprise of charges incurred in connection with
store keeping and other allied items.
Variable Overhead Expenses-Allocation of:
Statements of Shop Indirect Expenditure are prepared each month for
different Shops showing the total expenditure incurred in the Shops or on
their behalf. The order in which these statements are prepared depend
upon the services received by a Shop from other Shop, the one that
receives the least service being the first one for which the expenditure
statement is prepared followed by other Sections.
The full variable overhead expenses incurred by and for Service Sections
such as "Electric Power". "Steam Power", "Gas for Manufacturing Purpose"
etc. for which power cost and other cost statements are prepared, is
included in the respective Cost statements and the total cost thus arrived
at for each Section is allocated to other Productive and Non-productive
Sections in proportion to the service rendered to these Sections. The
costs, thus allocated, are again included in the NP and PM expenditure
statement of the respective Shop.
The variable expenditure of Service Section, for which no cost statement
is prepared, are transferred to the Productive Sections quarterly through
the step-ladder statement. The expenditure of each service included in the
stepladder is allocated to other sections on a pre-determined basis with
the concurrence of Factory Management.
The servicing Sections in the stepladder statement shall be arranged on
the left-hand side and Production Sections on the right hand side. The
Service Section which generally receive the least service from other
Sections should be placed first. The Section, which receives the next least
service from other sections, should be placed next and so on.
Power, Steam and Gas Cost Statement:
Factory Accounting
65
These statements will be separately prepared by the Accounts Officer
every month for each type of cost for the purpose of allocating these to
the Productive Sections. The General Manager will furnish all information
required by the Accounts Officers in this connection to facilitate the
preparation of these statements correctly.

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Rate of Levy of N.P. and P.M. Charges-Fixation of:
At the beginning of each quarter the Accounts Officer in consultation with
the General Manager will determine the rate of N.P. and P.M. charges
separately. At the time of working out these percentages the production
programme for the quarter, the budget of variable charges and the
under/over absorbed charges for the previous quarter, are taken into
consideration. These rates are fixed as a percentage of total direct labour
(both hand and machine for the N.P. charges and as a percentage of
direct machine labour only for the P.M. charges).
The concurrence of the General Manager of the Factory to these charges
should normally be obtained by the Accounts Officer.
Store Indirect Charges -How compiled and allocated:
The variable overhead expenditure relating to Stores Section of a Factory
is not allocated to Productive Sections on the basis applicable to N.P. and
P.M. Charges. The total variable charges relating to Stores Section are
collected on a special form and are allocated as a percentage which the
expenditure bears to the net total value of material demanded on direct
work orders and certain indirect work orders. S.I. charges are charged to
production as a percentage on the net value of materials drawn on each
job.
S.I. charges pertaining to 'Emergency reserves', 'Stock-pile Items' and
'Assessed Surpluses' will be estimated by the General Manager in
consultation with their Accounts Officer taking into account the probable
expenditure in the shape of labour, material etc. on the store-keeping of
these items. S.I. charges thus calculated will be kept out of cost of
production.
Factory Accounting
66
'Emergency reserves' for this purpose will be those reserves of
components, semi-manufactured articles as may be required to be
maintained in the Factories to enable them to reach the desired level of
output expected in an emergency.
In addition to the above, S.I. charges pertaining to the stock of stores
required for emergency purposes as distinct from surplus stores and
Stock-piles will also be reduced from the total S.I. charges incurred in
factory.
Variable Overhead Expenses-Importance of:
Variable Overhead Expenditure forms an important part of cost accounting
and the individuals entrusted with the task of determining quarterly
percentage of N.P., P.M. and S.I. charges should have a complete
understanding of each manufacturing shop. A close and careful study of
actual statistics is absolutely necessary.
Fixed Overhead Expenses-Collection of:
The collection of actual charges under fixed overhead expenses is done
from various documents furnished to the Accounts Office. The fixed
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charges of a Factory comprise various items of expenditure. Some of
these charges are directly accounted for in the Work Orders under 0-1
series but many other charges are compiled through allocation sheets. For
this purpose the General Managers are required to furnish to the Accounts
Officer information regarding staff strength etc. sectionwise from time to
time.
Fixed Overhead Expenses-Allocation of:
The allocation of fixed overhead charges to the various jobs is done on
the system known as "Stabilised On-cost System". Since Ordnance
Factories have to maintain equipment and staff for war emergency in
excess of their requirements for peace load a satisfactory distribution of
the fixed overhead charges cannot be obtained under the normal cost
accounting system. It has been ascertained that the total amount of fixed
charges which the Factories may incur during peace time can be absorbed
in full by the production in the Factories at a pre-determined load known
Factory Accounting
67
as the Datum load. The load is stated to 45% of the war load in the
Factories (40% for CFA).
Stabilised on Cost-Information required for
The factory will furnish-
(i) The quantity of each item of production in the Factory at full war
load.
(ii) A statement showing the number of Officers, Staff and workmen
in each category that would exist at Datum load distributed
section by section.
The Accounts Office, from the information obtained from the Factory and
the data available in their office, estimate the fixed overhead expenses for
each shop and for the Factory as a whole at Datum load, as well as the
direct labour expenditure that will be incurred for each production section
of the Factory for producing the full quota at datum Load. The percentage
which the amount of estimated fixed overhead expense bears to the direct
labour expenditure will then be determined and this will constitute the
Stabilised-on Cost rate of fixed charges.
Control of Variable Expenditure:
The expenditure on items of variable overhead generally fluctuates from
time to time largely with the load. To exercise control of the variable
expenditure the General Manager is furnished certain data by the
Accounts Officer. With a view to make full utilization of these statistics
General Managers have to maintain suitable records in order that such
expenditure may not go out of control. The following data is prepared
every month by the Accounts Office and furnished to the General
Managers for scrutiny and control purposes.
(1) Statement of Shop Charges
(2) Power, Electric, Steam and Gas statements
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(3) Financial Activities Report
(4) Ratio of Direct to Indirect Labour
Factory Accounting
68
Budget Committees:
With a view to exercise proper control on the indirect expenditure in
various Production Shops in the Factories it has been decided that
separate Budget Committees should be formed in each Factory. The main
functions of these Committees will be as follows:
(a) Central Budget Committee: This Committee will prepare budget of
direct expenditure (0-1 & 0-2 Work Orders) for each Shop either quarterly
or half yearly with reference to the load as already maintained and
intimate the same to the respective Divisional Officers and the Section
Budget Committee. It will then be for the:
(b) Section Budget Committees to watch that expenditure does not
exceed the budgeted demand. The Section Committees will by careful
analysis of all items of indirect expenditure incurred in the Production
Shop month by month or for any convenient period devise suitable means
for controlling the expenditure and variations thereto.
Factory Accounting
69

Accounting of Materials
Direct and Indirect Materials
For the purpose of ascertaining the cost of various articles produced in the
Factory, Materials utilized in production are classified as direct materials
and indirect materials. Material, which forms part of the finished product,
is defined as direct material. Material drawn for general shop use,
maintenance and repair services etc. are treated as indirect materials and
charged as part of the overhead charges.
Receipt of Stores & Accounting:
Two sets of accounting records are maintained for Stores viz. Bin Cards
and Priced Stores Ledgers. The Store Holder maintains a Bin Card for each
item of store, wherein, every receipt and issue is entered, and after each
transaction, the balance is shown. Thus, the factory for all materials
maintains a continuous quantitative account. The material code number
allotted to each item is entered in the bin card.
A priced store ledger is maintained by the Accounts Office in which all
receipts and issue showing quantity and value are posted for each item of
store in a separate folio and the balance shown after each transaction.
Pricing of receipt vouchers
Receipts are priced at the cost of purchase plus all incidental charges
incurred upto the point of receipt of the stores at the Factory. Thus, in the
case of imported stores, Sea freight, Customs duty and Port handling
charges and Inland freight charges are all added to the purchase price to
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arrive at the cost of stores in pricing receipt vouchers.
Components, standard tools required for general shop use, packing boxes
manufactured in the Factory are also transferred to stock and accounted
as receipts in the store ledgers. Such receipts are priced at the actual cost
of manufacture.
Factory Accounting
70
Scraps arising in production and surplus materials if any, are returned to
stores on return notes. These are accounted for as receipts in the store
ledger and priced at the latest ledger rates for the items.
Issue accounting and control:
Materials are issued by the stores section to shops only against authorised
requisitions called Demand Notes.
In regard to petty casual work or minor internal factory services or repairs
and maintenance or for departmental store orders, the planning
department releases Supplementary Work Order Drafts (SWOD). The
SWOD serves the combined purpose of an estimate and the
manufacture/material Warrant. Materials are drawn by the shops on the
authority of the SWODs.
For material required for general shop use, maintenance etc. the planning
department issues "Open Warrants" on quarterly basis which constitute
the authority for the shops to draw materials on as required basis.
Materials issued to outside consignees are supported by issue voucher
quoting reference to the demand against which such issues are made.
Pricing of Demand Notes:
Average Ledger Rate:
The demand and return notes are priced at the latest ledger rates. The
ledger rate is calculated afresh, everytime a new receipt occurs, taking
into account the balance available as the date of new receipt, as shown
below.
Quantity
(Nos.)
Value
(Rs.)
Rate
(Rs.)
Balance in a ledger folio 500 1000 2.00
Receipt 1000 2500
1500 3500 2.33
(new rate)
Issues are thus priced at the latest (Weighted) average rate.
Factory Accounting
71
Material Abstract:
(iii) The demand and return notes pertaining to a month, after they are
priced and posted in the store ledger, are sent to the Electronic Data
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Processing Section for preparing a material abstract. The material abstract
is a listing type of tabulation in which the expenditure incurred against
each work order and Warrant is shown demand/return note-wise and also
the net total against each work order/Warrant. The net expenditure for
each Warrant is posted in the cost card pertaining to the concerned
Warrant.
Factory Accounting
72

Plant and Machinery

Definition:
(1) The expenditure on purchase/acquisition/manufacture and erection of
Plant & Machinery is capitalized and depreciated on Straight Line
Method. Cost of manufacture of machinery etc. carried out for
supplies to others should not, however, be capitalised.
(2) The expenditure may be divided into two categories viz. 'New Capital
Items' and 'Renewal and Replacements'.
(3) The line of demarcation between 'New Capital Items' and 'Renewal
and Replacements' is as detailed below:
(a) The expenditure on provision of Plant and Machinery should
be categorised as pertaining to New Capital as follows:
(i) If the purchase/provision is due to an increase in
productive capacity caused by increase in the numbers
of the Army or scales of issue;
(ii) If it is an addition due to introduction of an entirely
new form of warfare or due to make up deficiency in
capacity to meet normal requirements as also to
establish indigenous production of those items which
are at present imported etc.; and
(iii) If it is on account of provision of safety devices of an
expansive type ordered by Factory Inspection etc.
(b) The expenditure should be treated as pertaining to Renewals/
Replacements in the following instances:
(i) Renewals/Replacements of like for like items or those
involving improvements in methods of operation of
manufacture, and
Factory Accounting
73
all expenditure involving betterment in some form or
(ii)
other including modernizing of obsolescent items.
List of Assets:
(i)Each Factory will maintain lists of all assets under Plant &
Machinery. Separate lists will be maintained for the different
shops and these will be in accordance with the entries in the
Block Registers maintained by Accounts Office.
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The Factory will forward the above lists annually to Accounts Office for
verification with the Block Registers maintained by Accounts Office.
(ii) All additions to or reduction (including transfers from one shop to
the other in the same Factory) will be supported by relevant
vouchers and a copy of each of such voucher should be
forwarded to the Accounts Office.
(iii) Inventory lists will be maintained by the Factory for all tools and
shop plant held by the Shops, separate lists being prepared for
each shop or section. The Accounts Office will audit these lists.
Writing of Capital Assets of small value:
When an item of capital asset has depreciated to Rs. 500 or below or an
amount equal to the first year's depreciation at the normal peace rate
whichever is less, or estimated residual value, in the case of items
depreciated on Straight Line Method, it shall be written off and kept at Nil
value in the Block Register until finally disposed of by sail, break-up or
otherwise.
Factory Accounting
74

Capital Account
MACRO - LEVEL
In ordnance and Ordnance Equipment Factories like Revenue Expenditure
Capital Expenditure is also maintained/accounted for, preparation of
Capital account. These accounts like various accounts are recorded in the
Principal Ledger to facilitate preparation of statement of Assets and
Liabilities and also capital Asset account.
Capital Assets are broadly divided into (1) Plant and Machinery (2)
Building (3) Other items (4) Tools costing 10,000/- and above.
1 Machinery Items Machinery (including air-cooling plants)
weighing machines, Furnaces, Railway lines
etc.
2 Building Items Include Buildings, Lands, roads, Water
reservoir etc.
3 Other Items Include Telephones, Telephone mains etc.
4 Tools Items Tools costing 10,000/- above are to be created
as capital assets. Life will be assessed
technically with reference to net cost.
Capital Assets are procured from Renewal and Replacement Grant (RR)
and New Capital Grant (NC). Separate allotments are made against the
two grants each year and Expenditure incurred is booked against code
allotment is watched through a medium of Register called Register of
Sanctions and Expenditure.
What are RR items?
When existing machinery has completed its normal life and reached to a

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stage Beyond Economical Repairs (BER) the factory submits a demand to
Accounts Office for its replacement. These items are called as RR items.
What are NC items?
Factory Accounting
75
Whenever due to change of production techniques or beginning of new
production or project, new kind of machinery is necessary. These items
are categorized as NC items.
Procurement
Machines are normally procured under LP, CP, EP and occasionally
through IFD.
Procurement through LP (Local purchase)
These purchases are made locally by the factory, under the powers vested
in GM, for the purpose. The factory places a demand initially and the
same submitted to accounts, which would audit the same in the following
lines.
(a) In case of RR items, the life of the machines, its book value and
other details which would justify its necessity.
(b) In the case of NC items justification for purchase giving special
attention to the fact that the purchase does not introduce a new
practice or in case of new projects whether the same have been
duly sanctioned and are within the authorized scale.
Once the demand is concurred in by the accounts Office the
factory will proceed with the usual of purchase such as calling
Tender Enquiries, preparation of CST (Comparative Statement of
Tenders) and placing of Supply Orders etc. The payment for the
purchase is made by accounts through LP Bills submitted by
Factory and the Amount is compiled under respective Code
Head. The items when received are accounted for by Factory by
preparing 'M' series Receipt Vouchers
Central Purchase and Foreign Purchase
Indents are placed by the factory to DGS & D (through OFB) and the
procurement of the items are arranged by DGS & D (Director General of
Supplies & Disposals). In the case of foreign purchase, procurement is
arranged by OFB directly. The paid DVS (for CP items) and Debit Notes
Factory Accounting
76
(RP items) are received in Accounts Office who would link the same with
the Receipt Vouchers prepared by the factory as and when the Machines
are received by them.
Accounting of Capital Items
The following documents are required for accounting of capital Assets:
1. 'M' Series Receipt Vouchers
2. Block Register
3. Depreciation Charges Registers
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4. Schedule of M & B series vouchers
5. Transfer Vouchers of Machinery
6. Issue Vouchers of Machinery
7. Linking Register ( Assets and Liabilities Register)
'M' series Receipt Vouchers:
The Vouchers are prepared by the Engineering Office of the factory after
the machines are inspected and installed. Continuos serial number is given
for the same in a year. These Vouchers contain the following information:
(a) Description of Machine
(b) Supply Order/Indent through which procured.
(c) Name of the supply order.
(d) Demand No. against which procured.
(e) Register No. allotted to machine.
(f) Section in which installed.
(g) The financial code to which the machine id debitable.
'M' Series Vouchers are priced with reference to the Supply Order, AT
Orders Etc. and are posted in the Liability Register and also linked with
the Asset items.
Block Register
There are two types of Block Register (i) Building Block Register (ii)
Machinery Block Register. The following information is available in the
Block Register.
Factory Accounting
77
(a) The grant from which the machine is procured
(b) Register No. of machine/building
(c) Name of Supplier
(d) Voucher No. and date on which brought on charge
(e) Original value
(f) Yearly depreciation and
(g) Book value of machine after March- of the respective year after
charging depreciation
Depreciation Charges Register
Depreciation Charge register is used to calculate the monthly depreciation
of the Machine. It contains the following information.
(1) Reg. No.
(2) Book Value
(3) Rate of depreciation
(4) Months from April to March.
(and under each month depicting sub. Columns as active - idle -
amount)
(5) Total depreciation as last column.
Schedule of M & B Series Vouchers
This schedule is used to watch the continuity of vouchers prepared by the
factory. The Register contains the following details
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1. Sl. No.
2. Rt.Vrs.No.
3. Reqd. No. of Machine
4. AT, No. & Date
5. Total
Sub.Columns:
EP, CP, LP, CD, Frt, Stock, Other Expenses, OMD
Factory Accounting
78
The details are posted under each head as above and the total tallied
under each head, with the final total.
Transfer Voucher of Machinery
To record the transfer of the machinery from one section to another, a
transfer voucher is prepared and the same is posted in Block Register.
Issue Voucher of Machinery
When Machine is transferred to another factory or sold through auction,
issue voucher is prepared. The issue voucher is posted in the Block
Register.
Linking Register
As soon as the payment is made by accounts Office through locally or as
and when the paid DVs or debit notes are received in Accounts or when
the amounts appear in CC02 (cash Compilation) these amounts along with
the details are extended in the asset side of the Linking Register. The
Asset side shows the following information :
Part: I
1. Sl. No.
2. Bill No.
3. Disbursement Voucher No.
4. Nomenclature of stores
5. Amount
6. Receipt Voucher No. and date
7. Value
8. Difference between column 4 & 6
9. No. and date of adjustment voucher
Part: II
1. Sl. No.
2. Rt. Voucher No. and Date
3. Nomenclature of stores
Factory Accounting
79
4. Amount
5. Bill No. Voucher No. & Date
6. Value
7. Difference between column 4 & 6
8. No. & Date of adjustment Voucher
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When a Receipt Voucher is received against an amount in the Asset
Register, the item is treated as cleared. Otherwise the item remain
outstanding.
When the amount appears in CCO2 the Liability can be treated as
cleared. It may also happen that no payment particulars have been
received and only Receipt Voucher has been received from Management.
In such a case the item will be taken in the Liability side to the register
and the same treated as outstanding Liability and carried forward to the
subsequent year.
Depreciation-Calculation
In case of plant and machinery life of machine considered as 20 years,
and therefore the total value of machine after deducting residual value
equal to one years depreciation is spread over the number of years of
assessed life of the machine. For example:
The value of machine : 20,000
1st year depreciation 5% (-) : 1000
----------
: 19,000
Yearly depreciation :19000/20
: 950
Monthly despeciation : 950/12
: 79.10
A machine is depreciation based on number of shifts machine worked
during the month. Accordingly depreciation is charged as per the following
rates:
Factory Accounting
80
Between 0 to 12 shift : half the normal rate
Between 13 to 37 shift : Normal rate
Between 38 to 62 shift : one and half time of normal Rate
62 and above : double the normal rate
The above details are furnished by the Mgt. In a statement called active
and idle statement, in respect of each section.
Charging of depreciation
The Depreciation Charge is considered as an item of overhead
expenditure and charge to production accordingly.
Financial Account
At the close of the financial year, to arrive at the outstanding Assets and
liabilities, a balance sheet is prepared in the following format.
1. Opening Balance showing the outstanding liability (previous Year)
2. Store received during the year
3. Outstanding asset at the close of the year
1. Opening Balance showing the outstanding asset…. in the beginning
of the year.
2. Payments made during the year
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3. Outstanding liability at the close of the financial year.
The above information is incorporated in the statement of assets and
liabilities prepared along with the production account.
In addition to the above. Main Capital account is also prepared in the
following lines.
Opening Balance
Net Capital from the previous year's Capital plus stores received during
the year under LP, CP, EP, (RR and N C)
Factory Accounting
81
Minus depreciation and issue etc. and the closing Balance: which is carried
forward to the next year.
Building
According to revised work procedure for an original work, it has to be
routed through four stages as follows:
(1) Acceptance of necessity
(2) Administrative approval
(3) Appropriation account
(4) Technical Sanction
When the administrative approval is received in AO, AO concurs the same.
The same is noted in administrative approval Register.
Civil work is carried out by MES authorities and every month MES
Expenditure Statement is received from UA GE concerned. The same
expenditure is recorded in the administrative approval for the work.
When the work is completed by MES and taken over by the factory, a 'B'
series voucher is prepared by the factory. The voucher is priced with
reference to the Expenditure recorded against the work after adding
departmental charges. The expenditure remaining unlinked is shown as
semi-works and shown as outstanding Assets.
The building has been considered as having 60 years life and accordingly
depreciation rate is worked out. The Building Block Register is also
maintained in the same format as 'Machinery Block Register'.
Depreciation of machinery is charged as fixed overheads in production.
Building also finds a place in the capital Accounts as in the case of Plant &
Machinery.
Extracts
A Class 'V' extract is the authority for undertaking Capital services by the
factory. This is issued by DGOF (OFB) with the previous concurrence of
Factory Accounting
82
Financial Authorities . The cost of the above Capital Series is chargeable to
NC grant or RR grant as required vides the Special enforcement in the
extract.
Payment of Bills
After the Supply Order in question is post-audited, Factory submits Bills
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for payment along with the original copy of the supply order. These bills
when received in Accounts are linked with the entry made in the supply
order register. The Bills are then checked with reference to the office copy
of the supply order regarding its rate and other terms and conditions. The
Amount passed for payment is then entered in the Bill Register, Allotment
and Expenditure Register. IT register, Supply order Register, Spot
Payment Register (in case of Spot Payments) and the page number of the
IT Register & Item No. of bill Register are entered on the reverse side of
the Bills. Name of the party, name of Bank and Amount is also entered
therein and initialed by Auditors, SO (A) and AO/ACA/I/C/DCA ETC.
simultaneously entries are also made on the reverse side of the Supply
Order (office copy) so as to avoid any double payment in this regard.
The Amount so paid entered in this Asset Register and linked with the
Receipt Voucher as already explained earlier.
Sale Account Register
Whenever old Machines are sold on auction, Management prepares Sale
Account and the same along with auction catalogue, MRO etc are
submitted to Accounts. From the above particulars, the sale account
maintained by the Accounts Office is completed. The sale a/c Register
gives the following information.
1. Sl. No.
2. Ivr. No.
3. Name of the Articles
4. Qty
5. Book Value
6. Sale Value
7. Name of purchaser
8. Amount released
Factory Accounting
83
9. Remarks, showing MRO No. & TE No.
Segregation of RR and NC items: New procedure for
Accounting RR items :
W.e.f. 19 06.91, new accounting procedure has been formulated for
accounting of machines procured from RR grant. The Salient features are
as under.
(1) The RR Fund will be transferred from consolidated fund of India.
On a annual basis
(2) Capital Assets of block - charge will only include items created
out of NC grant. No depreciated will be charged for such plant
and machinery and the same will be kept on its original value
through out.
(3) Separate allotment is made each year against RR final for
incurring expenditure against replacement of machines.
(4) A separate Performa block register will be maintained for items
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of P & M procured from RR Fund. The depreciation in value for
each year shall be exhibited with no reduction in original value.
(5) Depreciation will be computed based on the period for which the
machine is expected to be in use and not on usage basis.
(6) There will be no booking against booking of idle machinery
(01/0002/1/00) which will stand deleted henceforth.
(7) A separate linking register will be maintained to record all the RR
Assets for which payments have been made during the year but
remains unlinked for want of Receipt Vouchers. This register is
795.66x cv subject to audit.(8) A new code head is to be operated for booking expenditure
under RR viz. 813/01 instead of 822/31 hitherto operated for
both RR and NC.
The procedure is effective from the financial year 1990-91.
Factory Accounting
84

Miscellaneous
Cost Cards-How opened and dealt with:
The Accounts Office will maintain a Cost Card for every separate job on
which expenditure is incurred and in respect of which a Warrant or S.W.O.
Draft under a Syllabus Work Order is issued. Cost Cards are normally
maintained in respect of Indirect Work Orders.
The Cost Cards will be posted by the Accounts Office from various
abstracts prepared by them. The Cost Cards will be totalled on completion
of the work and cases in which the cost differs from the Standard
Estimates by more than 10% either in total or under any elements of total
cost will be reported to the General Manager for information and remarks
particularly as to whether the estimate required revision. Any other Cost
Card required by the General Manager will also be sent to him for
information.

Production Cost- How determined:

The Cost Cards on completion will show the expenditure on the articles of
a particular description which have been completely manufactured in the
Factory during the year from which the production costs per article can be
determined.

List of completed Warrants - Despatch to Accounts

Office:

In order to enable the Accounts Officer to close the Credit Cards for
completed Warrants, the Factory Management will furnish to the Accounts
Office by 10th of each month a list of Warrants completed during the
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preceding month. The Shop's copy of the completed Material and
Manufacture Warrant will also be sent to the Accounts Office for scrutiny
and record along with this list.
The Factory will also furnish to the Accounts Office by the 15th of April
every year a list of Warrants lying uncompleted on the 31st March.
Factory Accounting
85

Process Cost Statements:

In the case of certain articles for which process costs are required
quarterly, half yearly or annually statements, as required and on the lines
to be settled between the General Manager and the Accounts Officer will
be prepared by the Accounts Staff and furnished to the General Manager.
In the case of yearly statements it is essential that they should be furnished promptly after
the close of the financial year.
Accounts Statistics, Preparation and submission of:
The Accounts Office will prepare and furnish to the General Manager with
such periodical statistics as may be prescribed by the DGOF with the
concurrence of the CDA (Fys.). Any other information asked for by the
General Manager which can be furnished without inconvenience will also
be furnished by the Accounts Officer. In cases in which the Accounts
Officer considers that the information asked for by the General Managers
cannot be furnished without undue trouble and inconvenience the matter
will be referred for orders to the CDA (Fys.). who will consult the DGOF, if
necessary and inform him of the decision whenever a General Manager's
request for information is refused and the reasons therefor.
Charges kept out of Production:
The following types of expenditure may be kept out of Production
accounts:
(1) Expenditure on account of idle time payment paid to workmen of
all types in Ordnance Factories rendered surplus due to
reduction of workload.
(2) Unavoidable variable charges pertaining to Sections that have
been rendered idle due to reduction in load.
(3) Any other expenditure which is not legitimately chargeable to
Production Accounts of any year with the concurrence of
Associate Finance and Audit Authorities.
Cost Control
Factory Accounting
86
Cost control has been defined as "The guidance and regulation by
executive action of the cost of operating and undertaking."
The following are the different steps to achieve cost control.
(1) Set up targets for expenses
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(2)Measure the actual expenses from time to time
(3)Compare the actuals with the target and find out the difference
(4)Analyse the difference and find out the responsible persons
(5)Take corrective steps to eliminate the difference.
There are two main systems of cost control viz. Budgetary Control and
Standard Costing.

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