The Flow of Information in The Production Cycle Analysis of Flowchart One By Group One.

The Flow of Information in The Production Cycle

Analysis of Flowchart One By Group One

What is the Production Cycle?

A recurring set of business activities and related data processing operation associated with the manufacture of products

Context Diagram of Production Cycle

Production Cycle

Revenue Cycle Expenditure Cycle

General Ledger ManagementHRM/Payroll Cycle

Cost of goods manufactured Reports

Labor Costs

Labor Needs

Raw Materials Over-

head

Purchase Requisitions

Customer Orders

Sales Forecasts

Finished Goods

Flowchart Symbols

Document

Input/Output: Journals/Ledgers

Computer Processing resulting in change in data or information

Data stored on magnetic disks

Where to Start?

Is demand known?Yes. Then MRP-11, where purchase order

is starting pointNo. Then JIT, where sales order is the

starting point

PurchaseOrder

ReceivingReport

Time Card /Labor Ticket

VendorInvoice

Acquisitions/ Payment

Process

ProductionProcess

ProdutionOrder

Raw Materials Inventory

Management

Production Management

Completion of Production

Finished Goods Inventory

Management

CostAccounting Work In

Process Inventory

StandardCosts

FinishedGoods

Inventory

RawMaterials Inventory

Raw Material Inventory

Status Report

Finished Goods

Inventory Status Report

Work In Process Inventory Status

Report

Cost Activity or Standard Cost

Variances Report

SalesOrder

Cost of GoodsSold

Sales/ Collections

Process

PlanningControl Process

CostStandar

ds

Major Information Flows in the Production Process

Major Information Flows in the Production Process

Basic Activities

Product DesignPlanning/schedulingProduction operationsCost Accounting

Cost Accounting Information in The Production Cycle

Accurate and timely accounting information for decisions in:

Product Mix Product PricingResource Allocation and PlanningCost Management

Cost Accounting

To make these decisions, more detailed information is required about costs are needed than those needed to prepare financial statements. Cost accounting provides information for planning, controlling, and evaluating production operations.

Raw Materials Inventory

Management

RawMaterials Inventory

Raw Material Inventory

Status Report

ReceivingReport

VendorInvoice

PurchaseOrder

Report or Purchase Order

If there is enough material then create a Raw Material Inventory Status Report

If there is not enough material create a Purchase Order

Vendor Invoice

1. Receive vendor invoice

2. Revise the Raw Material Master file to see if we have enough

material

Controls for Receiving Reports and Vender InvoicesSegregation of dutySegregation of terminals Access controls requiring electronic

signatureInspection of goodsVerification of purchase orderMaterials requisition

Cost Accounting: Standard Cost

Standard Cost Document: contains budgeted rates for labor/oh, cost of raw materials

Are estimates from previous data, forecasted data, managerial creative input

Inputed into Standard Cost File

Cost Accounting: Actual Costs

Labor/OH costs from time cards/labor tickets

Raw materials costs from raw material/inventory files

Cost Accounting: On-line Processing

Appropriate accounts are debited/credited updating WIP/Inventory files

Cost Activity Report/Cost Variance Report: accounting for differences in actual/estimated costs

Finished goods Inventory

Management

MRP system is used where demand is high and

constant to reduce levels of inventory by scheduling

productionJIT Systems is not used

here because it helps eliminate finished goods

inventoryMonitor vendor

performance for delivery dependability and quality.

Finished Goods

Inventory

Finished goodsInventory

managementProduction

Order

ProductionManagement

CompletionOf

Production

Work in ProcessInventory

Production Management

Product qualityInventionsCorrect errors Reason for missing

products

Finished goods

Inventor

Finished Goods

Inventory



Order


CompletionOf

Production


Finished goods inventory management

Any defective products are scheduled for re-production or repaired

Finished goods

Inventor

Finished Goods

Inventory



Order


CompletionOf

Production


Work in Process Inventory

Work in Process: Tasks done after raw materials process

Done after Cost Accounting or Production Management Process


FinishedGoodsInventory

Cost of GoodsSold

Finished Goods Inventory Status Report


•Use activity base costing to capture performance cost data by each cost driver

•Analyze bill of materials to identify which components are in use

Production Process Sales/ Collection Process



Cost of GoodsSold


Finish Goods Inventory

•Cost Accounting

•To collect and process information

•Calculate the inventory and cost of goods sold

•For company’s financial statement



Controls for Finish Goods Inventory

•Threats and Controls

•Recording and posting error resulting in inaccurate cost data

•Data entry edit controls; use of bar-code scanning; reconciliation of recorded amounts with periodic physical counts

•Lost of Data

•Back up and disaster recovery planning

•Poor Performance

•Improved and timelier reporting

Production Process



Cost of GoodsSold


Finished Goods Inventory to Finish Goods Inventory Status Report

•The batch total is retrieved in the Finish Goods Inventory to produce a Finish Goods Inventory Status Report




Cost of GoodsSold


Finished Goods Inventory to Cost of Goods Sold Journal Entries

•The batch total from the Finish Goods Inventory is also sent to the Cost of Goods Sold

•Debit Accounts Receivable

•Credit Sales

•Debit Cost of Goods Sold

•Credit Inventory


Any Questions?

The Flow of Information in The Production Cycle Analysis of Flowchart One By Group One.

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