Production Cycle Kevin Ma Steven Radcliff Jie Chen Ernesto Pena Bryan Vien PRODUCTION FLOWCHART: PAGE 3

Production Cycle

Kevin MaSteven RadcliffJie ChenErnesto PenaBryan Vien

PRODUCTION FLOWCHART: PAGE 3

Narrative

The company issues reports at the beginning of the period to check the status of raw materials, finished goods, and the capacity of the production lines. The production schedules are sent to the production department and the material requisitions were approved by the inventory control department; the production takes place. In the meantime, the production schedule is made. After the production is completed, a production status report is created and is sent to the production control department. The completed units are sent to the inventory control department.

Narrative

The cost accounting department receives purchase orders, job time cards, and material requisition forms and processes the financial data related to the job order. The journal vouchers are used to update the general ledger to post adjustments. The documents are sent to the management.

I n v e n t o r ySt a t us R e p o r t


F a c t o rA v a ila bilit y

R e p o r t


R e p o r t

3 2

1P r o duc t io n O r de r

N



4

3

2

1M a t e r ia l R e quisit io n

N

3

2


N

Jo ur n a l Vo uc h e r Jo ur n a l Vo uc h e r



2

1P r o duc t io n Sc h e dule

D


Jo b T im e C a r ds Jo b T im e C a r ds

P r o duc t io n St a t us P r o duc t io n St a t us

2C o m p le t e d P r o duc t io n

O r de r


R a w M a te r ia ls a n d F in ish e dG o o d s

A ttach to co m p le ted P ro d u ctio nO rd er

P r o d u c tio nC o n tr o l

P r o d u c tio nD ep ar tm en t

I n v en to r yC o n tr o l

C o s tAc c o u n tin g

G en er a lL ed g er

P o s t to W I P r e c o r d s


P o s t to I n v e n to r y r e c o r d s


M ateria ls P laced in P ro d u ctio n


C o n v e r s io n C o s ts


O r de r

Su m m a r ize P r o d u c tio n

C o s t o f G o o d s M an u factu red


O r de r

M

M

M a n a ge m e n t

5

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1 0

1 1

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Production Flowchart

Step 1

Prior to any production, Inventory Control Department and Production Department each performs a routine procedure.

Inventory Status Report


Factor Availability

Report

Factor Availability

Report

Production Control

Production Department

Inventory Control

Step 1



Factor Availability

Report

Factor Availability

Report

Production Control


Inventory Control

• Inventory Control Department performs a status check on the amount of raw materials and finished goods and then sends the report to Production Control Department.

• This is to inform the Production Control Department the amount of available raw materials can go into production, and the amount of finished units can be used to fill customers orders.

Step 1



Factor Availability

Report

Factor Availability

Report

Production Control


Inventory Control

• Production Department checks the production capacity and issues a Factor Availability Report and sends it to Production Control Department.

Factor Availability Report – states the available production capacity. It contains how much resource such as labor, land, capital etc are available.

• With these information, the Production Control Department can make plans to schedule productions, so all orders can be met in time.




R e p o r t


R e p o r t

3 2


N



4

3

2


N

3

2


N




2


D





O r de r

















O r de r




O r de r

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M

M a n a ge m e n t

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• Production Control Department issues production orders which authorize the unit production.a. A copy of the P.O. is sent to Cost Accounting

Department. b. Another copy of the P.O. is sent to the

Production Dept. which authorizes them to produce the order.

c. The last copy of the P.O. is filed numerically in Production Control Department.

Step 2

3

2

Production Control


Cost Accounting

Production Order 1

Production Order 2

Production Order 1

N

Completed Production Order




R e p o r t


R e p o r t

3 2


N



4

3

2


N

3

2


N




2


D





O r de r

















O r de r




O r de r

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M

M a n a ge m e n t

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• Production Control issues material requisition.

a. Production Control send 3 copies of the Material Requisition to inventory control.

b. The 4th copy of the Material Requisition is filed numerically in Production Control.

Step 3

4

3

2

Material Req. 1

N

3

2

Material Req. 1

Production Control


Inventory Control

Cost Accounting




R e p o r t


R e p o r t

3 2


N



4

3

2


N

3

2


N




2


D





O r de r

















O r de r




O r de r

M

M

M a n a ge m e n t

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• Inventory Control receives 3 copies of the Material Requisition from Production Control.

a. 1 copy goes to Cost Accounting.

b. Another goes to the Production Dept. along with the requested amount of raw materials.

c. The last copy is filed numerically in Inventory Control to keep track of the inflows and outflows of raw materials

Step 4

3

2

Material Req. 1

Material Req. 2

N

Production Control


Inventory Control

Cost Accounting

Material Req. 1




R e p o r t


R e p o r t

3 2


N



4

3

2


N

3

2


N




2


D





O r de r

















O r de r




O r de r

M

M

M a n a ge m e n t

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• Production Control sends a copy of the Production Schedule to the Production Dept. This informs the Production Department the scheduled date of completion of that particular order.

• The other copy of the Production Schedule is filed in Production Control by date.

Step 5

2

Production Schedule 1

D

Production Control


Production Schedule 1




R e p o r t


R e p o r t

3 2


N



4

3

2


N

3

2


N




2


D





O r de r

















O r de r




O r de r

M

M

M a n a ge m e n t

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• Inventory Control creates a Journal Voucher which contains information about the amount of material used in production. And this journal voucher is used to update the general ledger.

Journal Voucher updates general ledger.

Step 6

Journal Voucher

InventoryControl

General Ledger

Journal Voucher




R e p o r t


R e p o r t

3 2


N



4

3

2


N

3

2


N




2


D





O r de r

















O r de r




O r de r

M

M

M a n a ge m e n t

5

1

2

3

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1 0

1 1

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• This is the actual production process. As the Production Department receives the production order, which is the approval of production from step (2), and the raw material required for production from step (4), the production takes place.

• The material requisition form is attached to the production order form, and along with the finished production, they are sent to the Inventory Control Department.

Step 7

Production Order 2


Inventory Control

Completed Production Order 2

Production Order 2




R e p o r t


R e p o r t

3 2


N



4

3

2


N

3

2


N




2


D





O r de r

















O r de r




O r de r

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M

M a n a ge m e n t

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1. Inventory Control receives the Completed Production Order along with the Material Requisition from the Production Dept. (7)

a. They post to the inventory records.

Quantity producedQuantity of material used

b. It is sent to Cost Accounting i. To summarize productionii. Record unit cost/total cost/quantity

etc.

Step 8


Inventory control

Cost Accounting





R e p o r t


R e p o r t

3 2


N



4

3

2


N

3

2


N




2


D





O r de r

















O r de r




O r de r

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M a n a ge m e n t

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1. The Production Dept. sends the Job Time Cards to Cost Accounting to calculate Labor Costs.a. Cost Accounting posts to WIP records.b. Direct Labor Costc. Indirect Labor Cost

Step 9

Job Time Card

ProductionDepartment

Cost Accounting

Job Time Card




R e p o r t


R e p o r t

3 2


N



4

3

2


N

3

2


N




2


D





O r de r

















O r de r




O r de r

M

M

M a n a ge m e n t

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Step 10

Production Status

Production Control


Production Status

Production Control receives a Production Status Report from the Production Dept.




R e p o r t


R e p o r t

3 2


N



4

3

2


N

3

2


N




2


D





O r de r

















O r de r




O r de r

M

M

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Step 11

Production Order 1

Cost Accounting

Post to WIP Records

Cost Accounting posts the Production Order to WIP records.

The Production order was received from Inventory Control earlier in step (2).




R e p o r t


R e p o r t

3 2


N



4

3

2


N

3

2


N




2


D





O r de r

















O r de r




O r de r

M

M

M a n a ge m e n t

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Cost Accounting posts the Material Requisition to WIP records.

The Material Requisition was received from Inventory Control in step (4).

Step 12

Material Req. 1

Cost Accounting

Post to WIP Records




R e p o r t


R e p o r t

3 2


N



4

3

2


N

3

2


N




2


D





O r de r

















O r de r




O r de r

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1. Cost Accounting updates the General Ledger by using a Journal Voucher to record Conversion Costs

= Direct Labor + Manufacturing Cost Overhead Cost

Step 13

Journal Voucher

Cost Accounting

General Ledger

Journal Voucher




R e p o r t


R e p o r t

3 2


N



4

3

2


N

3

2


N




2


D





O r de r

















O r de r




O r de r

M

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Step 14

1. Cost Accounting updates the General Ledger by using the Journal Voucher to record the Cost of Goods Manufactured.

Direct Material used + Direct Manufacturing Labor + Manufacturing Overhead Costs + Work in Process (beginning) - Work in Process (ending) = Cost of Goods Manufactured

Journal Voucher

Cost Accounting

General Ledger

Journal Voucher




R e p o r t


R e p o r t

3 2


N



4

3

2


N

3

2


N




2


D





O r de r

















O r de r




O r de r

M

M

M a n a ge m e n t

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Step 15


Cost Accounting

General Ledger

M

M

Management

Cost Accounting sends the Completed Production Order to Management.




R e p o r t


R e p o r t

3 2


N



4

3

2


N

3

2


N




2


D





O r de r

















O r de r




O r de r

M

M

M a n a ge m e n t

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Threats and Controls

Threat – lack of management control during the process could cause under or over production

Control – proper approval of production orders by involving management earlier on in the process(2)

Control – periodic status reports to management

Threats and Controls (cont)

Threat – inaccurate inventory control, threat is this system only shows when raw material is being used, but it does not show when/how many completed units the company has on hand

Control – inventory control department should update the general ledger by sending a journal voucher after production has been completed

Control – use RFID technology to keep track of inventory

Control – do a periodic physical inventory counts

Control – move tickets should be used to document subsequent movement of inventory.


Threat – employees cheating on how many hours they actually worked

Control – computerized time card system that automatically records and tightened management control procedures

Control – install camera’s to monitor that employees are where they say they were

Control – have manager responsible for time card accuracy from their specific department


Threat – time conflicts might occur between different production lines without a proper production schedule when planning production orders.

Control – make the production schedule right after the production order.

THANK YOU FOR YOUR TIME!

Documents

Production Cycle Kevin Ma Steven Radcliff Jie Chen Ernesto Pena Bryan Vien PRODUCTION FLOWCHART: PAGE 3