WORKSHOP MANUFACTURING SUSPENSE

NOTES ON WORKSHOP MANUFACTURE SUSPENSE ACCOUNT PREPARATION OF WMS BUDGET
What is Workshop- Manufacture Suspense Account?
1. It is a Suspense Head of Account under Capital (7200). It is operated upon to accommodate expenses incurred on labour, material and on-cost charges expended on various jobs. The labour pay sheets when. passed for payment are allocated to the head 'Labour' under Workshop Manufacture Suspense Account which is cleared to various jobs with reference to the Time/Tally Sheets. Debits on account of materials issued to various jobs are allocated to various work orders under the Workshop Manufacturing Suspense Account. Overheads charges i.e. shop-on-cost and general on-cost incurred are charged to on-cost work orders under W.M.S. Account and spread to various jobs on the basis of pre - determined rates, labour, material and on cost charges so booked are accumulated in Workshop General Register which is a detailed subsidiary register of W.M.S. Account. Charges appearing in Workshop General Register against various Work Orders are summarised in out-turn statements Part I and Part II which are also meant for raising debits and effecting recoveries. A Workshop Manufacturing Suspense account Current is compiled and journal entries prepared for incorporation of the transactions affecting Workshop Manufacturing Suspense Account in the Finance Accounts.
2.1. Need to maintain Manufacture Suspense Account:
Railways are a Commercial Concern. Costs incurred in Workshops affect maintenance costs of running the Railway. Any extravagance in Workshops is likely to tell upon operating costs resulting in erosion of profits. It is, therefore, necessary to have proper cost control over expenses incurred in a Workshop. For this purpose, a Suspense Head of Account is needed under which all expenses incurred in a Workshop are accumulated and analysed so as to pinpoint sources of waste and efficiency.
2.2. Expenditure incurred on jobs concerning manufacture and maintenance of Rolling Stock is debitable to Final Heads of Accounts while expenditure incurred on jobs undertaken on behalf of Stores Department, other Home Line Department, other Railways and other Government Departments is transferable to their accounts, Expenditure on jobs undertaken on behalf of Public Bodies, Private Bodies, individuals and Railway employees is recoverable from them. These transfers or recoveries take effect only after the jobs are undertaken or delivered. Till Manufacturing activities are completed, expenditure incurred on raw material, labour and overheads is to be temporarily held under a Suspense Head of Account and cleared therefrom as soon as the job is completed or stores delivered.
3. RECONCILIATION :
The reconciliation of balances appearing in W.M.S. Account Current and those appearing under Workshop Manufacturing Suspense Account in the General Books (Finance Accounts) is effected to prove accuracy of the two records. Occasions are there for the differences. There are certain vouchers which are journalised against W.M.S. Account, but are not taken in the out-turn statement due to the non-receipt of vouchers from the Executive duly accepted and allocated. Similarly, there are certain vouchers which are received from Executive duly accepted and allocate and are taken in the out-turn statement, but due. to non-receipt i debits, these are not accounted for in the General Books. These differences are detailed in form W-1624 to ensure proper action being taken for its accountal. The result of reconciliation is put u to the Workshop Accounts Officer Monthly.
4. What does the Balance under W.M.S. Account represent The balance under W.M.S. Account represents -
(i) The out-lay on works executed for other department ( the Home line pending acceptance of bills.
(ii) Out-lay on works executed for other Railways other that those in respect of repairs to their Rolling Stock pending acceptance of bills.
(Hi) Out-lay on works executed for other department pending acceptance of bill..
(iv) Outlay on store stock series credit for which is awaited from Stores Department.
(v) Under and Over charges : MANUFACTURE & REPAIRS: resulting from the differences between the actual cost of repair and maintenance and the estimated costs at which materials have I issued.
(vi) Under and over charges on cost
(a) arising out of the difference between the actual oncost expenditure booked to on-cost work orders and that distributed amongst the various work orders on a pre-determined rate,; II
(b) and difference between Time/Tally Sheets and labour paysheets on account of average hourly rates of labour.
(vii) Provisional adjustment of issue rate against wrong work order.
5. REVIEW OF BALANCES UNDER W.M.S. ACCOUNT:
The balance under W.M.S. Account is reviewed month) to see -
(i) That all items are current and have been undertaker after the issue of a proper work order under the sanction of i competent authority.
(ii)That the details consist of nothing else except labour material and work on-cost charges expended on unfinished jobs or completed jobs awaiting adjustment.
(iii) That there is no credit items in the details of balance) and if there are any such items, they are noted for immediate adjustment.
(iv) That in case of jobs undertaken for outsiders, a sufficient deposit has been made where such a deposit is required by the rules and on the first appearance of work, it is seen that an estimate is on record containing the extra percentage charges required under the rules and accepted by the party ordering the work
(v) That there are no inefficient balance and the periodical adjustments in respect of under/over charges under the manufacture and repair work orders are carried out regularly and outstanding are not allowed to accumulate
6. Compilation of WMS budget
6.1 The following is the proforma for preparing the WMS Budget
Debits Credits
balance at the debit of manufacture at commencement (i) To works Capital
of the year (ii) To Works DRF
(iii) To works DF
(ivi) To Works OLW {R}
Total (i) to (iv)
Debits during the year (v) To Capital Stores Suspense manufacture for stock
Labour manufactured stores
Stores returned stores
Direct purchase issues within demand
Miscellaneous revenue
Total debits foreign railway
Less issues within demand total credits
Less issues within demand
Net debits Net Credits
Closing balance
(i) Issues to stores suspense
(ii) Issues to works
Net debit or credit during the year.
Budget allotment required for total debits during the year.
Total debits during the year.
Grand total.
6,2 The provision against the various items on the debit and credit sides are estimated for the current year on the basis of the total expenditure under each head after taking into consideration the changes in the programme of works both relating to capital and revenue. The provision (or the existing year is based on the figures of revised estimates for the current year, after taking into account the programme of works for that year and also in the case of labour of all grades increases, appointments, retrenchments, etc. to be given effect to during that year. The detailed instructions as followed in respect of compiling this year are as follows:-
6.2.1.3. Material and Stores from Stores Suspense :-
The cost of stores anticipated to be drawn from stock is shown against this head. The figures provided against this item agree with the corresponding figure provided in the estimates of stores transactions under issues to Capital Manufacture Suspense. The information in this respect is supplied by Works Manager to the Controller of Stores for including figures in the budget (or Capital Stores Suspense.
6.2.1.4. Miscellaneous charges and Material by Direct purchases:
Against this item, the figures for cost of material required to be drawn for other Departments. Divisions, Workshops and on direct despatch orders issued by Controller of Stores are shown. The charges of miscellaneous nature are also included in these figures.


6.2.1 DEBIT SIDE : OPENING BALANCE : The closing balance under W.M.S including the balance under head 'Labour Suspense' at the close of the previous financial year is taken as the opening balance at the commencement of the year. This tallies with the balance in the General Book.
The provision under this head should be made on the basis of the actual expenditure after taking into consideration the change in the programme o< works both relating to Capital and Revenue.
6.2.1.5. Deduct (or issues within the Demand:
In order to avoid double provision of funds within the demand once under capital suspense and again under respective demand for capital works, the issues to capital works and issued to capital stores suspense are deducted from the total debits during the year for which budget provision is asked for.
6.2.2.1. Credit Side:-
(i) To Works, Capital DRF, DP, OLWR:- the figures of credits pertain to the works expenditure which is required to be passed through W.M.S. Account and which are programmed for execution during a year. The figures against each head tally with the corresponding figures under the respective demands of the works concerned.
6.2.2.2. To Capital Stores Suspense (Material sent to Stores):-
The figures represent the cost of manufactured material anticipated to be returned to Stores for stock purchases during a year. The provision is based on the information to be given by stores on account of cost of surplus and released material required to be returned to stores on Advice Notes are also indicated separately under this head. The figures under these heads also correspondingly agree with the figures adopted on debit side of stores suspense.
6.2.2.3. TO REVENUE CREDITS :
The figures relate to repairs and maintenance charges of Rolling Stock, Machinery and Plant, etc. The provision under this head should agree with the provision made in the estimates of Revenue Abstracts B & C against the head
(1) Workshop Repairs under -
(a) Rolling Stock ;
(b) Equipment; and
(2) New Minor Works.
6. 2.2.4. To work done for Foreign Railways & other Governments and other Public bodies
The figures under this head are estimated closely the basis of anticipated indents for works to be released ail workshops. Necessary information of necessary requirements is obtained from the concerned departments of the Railway.

6.2.2.5. Deduct for issues within the demand
The deduct figures for issues within, the demand pa contra figures as reduced from debits are also taken on credit side, Provision of funds is made for credits after deduction for issue within the demand.

6.2.2.6. BALANCE :
The anticipated balance at the close of the year represents' the difference between grand total of debits (including open balance) and credit during the year.
6.2.2.7. Net debit and credit :-
Net debit and credit during the year denote the difference between the total debits and credits during the year i.e. after exclude the deduct figures of issues within the demand for each side.
6.3. Grand Total is for total debits during the year. ;
6.4. Budget allotment required :-
Budget Allotment required is for total debits during year.
6.5. The gross budgeting of manufacturing suspense account signifies separate provision of funds to be made for debits art credits during the year instead of the net debits or credits. The expenditure being outlay on manufacturing operations is booked by debit to W.M.S. Account and clearance of the same represented} outturn is indicated separately by adjustment or credits. The credit) are treated beyond the scope of demand. The variations of actual in relation to budget for debits and credits separately are explained in financial reviews and in appropriation accounts. The gross budgeting system has therefore ensured effective budgetary control over the expenditure on manufacturing operations.
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