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

2. What is the Production Cycle?
A recurring set of business activities and related data processing operation associated with the manufacture of products

3. Context Diagram of Production Cycle
Customer Orders
Purchase Requisitions
Revenue Cycle
Expenditure Cycle
Finished Goods
Raw Materials
Sales Forecasts
Over-head
Production Cycle
Cost of goods manufactured
Labor Needs
General Ledger
Labor Costs
HRM/Payroll Cycle
Reports
Management

4. Flowchart Symbols Document Input/Output: Journals/Ledgers
Computer Processing resulting in change in data or information
Data stored on magnetic disks

5. Where to Start? Is demand known?
Yes. Then MRP-11, where purchase order is starting point
No. Then JIT, where sales order is the starting point

6. Major Information Flows in the Production Process
Sales/ Collections Process
Planning Control Process
Acquisitions/ Payment Process
Standard Costs
Prodution Order
Sales Order
Purchase Order
Raw Materials Inventory Management
Finished Goods Inventory Management
Cost Standards
Production Management
Receiving Report
Raw Materials Inventory
Finished Goods Inventory
Cost of Goods Sold
Work In Process Inventory
Cost Accounting
Completion of Production
Vendor Invoice
Raw Material Inventory Status Report
Cost Activity or Standard Cost Variances Report
Work In Process Inventory Status Report
Finished Goods Inventory Status Report
Time Card / Labor Ticket

7. Basic Activities Product Design Planning/scheduling
Production operations
Cost Accounting

8. Cost Accounting Information in The Production Cycle
Accurate and timely accounting information for decisions in:
Product Mix
Product Pricing
Resource Allocation and Planning
Cost Management

9. 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.

10. Purchase Order Receiving Report Vendor Invoice
Raw Materials
Inventory
Management
Purchase
Order
Receiving
Report
Raw
Materials
Inventory
Vendor
Invoice
Raw Material
Inventory
Status Report

11. 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

12. Vendor Invoice Receive vendor invoice
Revise the Raw Material Master file to see if we have enough material

13. Controls for Receiving Reports and Vender Invoices
Segregation of duty
Segregation of terminals
Access controls requiring electronic signature
Inspection of goods
Verification of purchase order
Materials requisition

14. 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

15. Cost Accounting: Actual Costs
Labor/OH costs from time cards/labor tickets
Raw materials costs from raw material/inventory files

16. 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

17. Finished goods Inventory Management
Production
Order
MRP system is used where demand is high and constant to reduce levels of inventory by scheduling production
JIT Systems is not used here because it helps eliminate finished goods inventory
Monitor vendor performance for delivery dependability and quality.
Production
Management
Work in
Process
Inventory
Finished
Goods
Inventory
Completion Of
Production

18. Production Management
Finished goods
Inventory
management
Finished goods
Inventor
Production
Order
Product quality
Inventions
Correct errors
Reason for missing products
Production
Management
Finished
Goods
Inventory
Work in
Process
Inventory
Completion Of
Production

19. Finished goods inventory management
Production
Order
Any defective products are scheduled for re-production or repaired
Production
Management
Finished
Goods
Inventory
Work in
Process
Inventory
Completion Of
Production

20. Work in Process Inventory
Work in Process: Tasks done after raw materials process
Done after Cost Accounting or Production Management Process

21. Sales/ Collection Process
Production Process
Sales/ Collection Process
Completion of Production
Use activity base costing to capture performance cost data by each cost driver
Analyze bill of materials to identify which components are in use
Finished
Goods
Inventory
Cost of
Goods
Sold
Completion of Production
Finished Goods Inventory Status Report

22. Sales/ Collection Process
Production Process
Sales/ Collection Process
Finish Goods Inventory
Cost Accounting
To collect and process information
Calculate the inventory and cost of goods sold
For company’s financial statement
Finished
Goods
Inventory
Cost of
Goods
Sold
Completion of Production
Finished Goods Inventory Status Report

23. Controls for Finish Goods Inventory
Production Process
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
Finished
Goods
Inventory

24. Sales/ Collection Process
Production Process
Sales/ Collection Process
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
Finished
Goods
Inventory
Cost of
Goods
Sold
Completion of Production
Finished Goods Inventory Status Report

25. Sales/ Collection Process
Production Process
Sales/ Collection Process
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
Finished
Goods
Inventory
Cost of
Goods
Sold
Completion of Production
Finished Goods Inventory Status Report

26. Any Questions?