1. Major Information Flows in the Production Process
By: Jennifer Ruiz de Castilla
Manuel Flores
Robert Ordóñez
Jeremiah Henry

2. Introduction
The Production Process is a recurring set of effective operations linked to manufacturing and production
This process allocates costs to produce profitable products
The controls will be examined at the end of our presentation.

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

4. Symbols
Magnetic
Disk
Document
Computer
Processing
Input/Output

5. Definitions
Document: a document or report may be prepared by hand or printed by a computer (Steinbart, 72).
Magnetic Disk: data stored permanently on a magnetic disk; used for master files and databases (Steinbart, 73).
Computer Processing: a computer performed processing function; usually results in a change in data or information (Steingbart, 72).
Input/Output: any input or output function on a program flowchart. Also, used to represent accounting journals and ledgers in a document flowchart (Steinbart, 72).

6. Where Do We Begin? Standard Cost Standard Cost Costs Cost Standards
Accounting
Standard Cost
Variances
Report
We begin in the Planning Control Process department where we establish our cost standards or our budget.
Our current cost standards document is entered into the Standard Costs Master File. Here it can be compared to the previous period’s budget stored in the database and management can use this tool to help become more efficient.
The Standard Costs Master File is then sent to the Accounting Department to be
processed and verified in order to update the Standard Cost Variance Report.
Finally, an updated and current Standard Cost Variance Report is produced.

7. Moving Into Production
Order
Sales
Order
Production
Management
When a customer makes an order, whether at a store, by mail, by phone, or through a website, their order data gets recorded onto a Sales Order Document which contains
information about the item numbers, quantities, prices, and
other terms of sale. This document is generated in the
Sales/Collections Department.
The Sales Order document is then sent to the Production Dept. where a Production Order is made. The production order document authorizes the manufacture of a specified quantity of a particular product.
Management must process the production order into the WIP Inventory Master File to see if the order can be fulfilled with what is available on hand. Otherwise, a back order, stating insufficient inventory, will have to be created.
Finally, the WIP Inventory Status Report is also updated.
WIP
Inventory
WIP
Inventory
Status
Report

8. What’s Needed? Raw Materials Raw Inventory Raw Materials Materials
Status
Report
Purchase
Order
Raw Materials
Inventory
Management
The Raw Materials Inventory Master File is inspected to acquire the amount of
available materials on hand.
After processing the database, Management determines what materials are needed
to produce the final product and prepares the Purchase Order. This document
requests a supplier to sell and deliver specified products at designated prices. It is
also a promise to pay and becomes a contract once the supplier accepts it.
The Raw Materials Inventory Status Report is also updated based on the updated
database of the master file. When raw materials get sent to production, this will
trigger a debit to work in process.

9. Receiving Materials The Purchase Order gets sent out to the
vendor and is returned with the raw materials
ordered and the vendor invoice.
At this time the receiving report is also made
to record all that was received. It can be
verified to see if anything is missing.
The Receiving Report and Vendor Invoice
both update the Raw Materials Inventory
Master File. Raw Materials Inventory will be
debited and the Vendor Invoice will credit
Accounts Payable.
Also, once the Master File is updated,
Management must once again process the
database to verify that everything is correct
and in agreement with the original purchase
order. And finally, once again, the status report is updated.
Purchase
Order
Raw Materials
Inventory
Management
Receiving
Report
Raw
Materials
Inventory
Vendor
Invoice
Raw Materials
Inventory
Status
Report

10. Time Accountability Time Card/ Labor Ticket Cost Accounting Cost
Activity
Report
The Accounting Department compares and verifies that the Receiving
Report and Vendor Invoice match with the original Purchase Order.
This allows them to authorize the Work In Process (WIP) for the product.
Time and labor are accounted for with each employee’s time card/labor
ticket.
The Cost Activity Report is updated with the activities performed by the
Accounting Department.

11. Time to Complete Production
Cost
Accounting
WIP
Inventory
WIP Inventory
Status Report
Completion of
Production
Now that the Accounting Dept. has given consent, by updating the WIP
Inventory database, the WIP Inventory can be completed in production.
In other words, the completion of production process is authorized by the
updated database of the WIP Inventory Master File.
The WIP report is updated as WIP Inventory is moved through completion of
production which transfers to finished goods inventory.

12. Finished Goods The Completion of Production process
Order
Finished Goods
Inventory
Management
The Completion of Production process
updates the Finished Goods Inventory
Master File.
The updated Master File allows for the
Status Report to be updated and current.
Finished Goods Inventory Management
will also process the database of the
Master File to verify that the final product
matches the original production order.
Finished
Goods
Inventory
Completion of
Production
Finished Goods
Inventory
Status Report

13. Finally… WIP Inventory Finished Goods Inventory Cost of Goods Sold
Completion Of
Production
As the product is completed, it can now be shipped out to the customer.
The completion of the product thus triggers a debit to Finished Goods and a credit
to Work In Process.

14. Control Objectives Product Design Planning and Scheduling
Produces products that are profitable and can be changed if necessary
Poor design can be costly throughout the production process
Planning and Scheduling
Management must control manufacturing with approved production orders.
Budgets must be followed and implemented
during production

15. Control Objectives Production Operations Cost Accounting
Work in process is controlled by documentation of raw material used
Disaster recovery plans are produced by vendors in order to minimize losses during a disaster
Cost Accounting
Physical counts reconcile actual inventory against system counts

16. Cost Objectives General Threats
Periodic reports on performance control costs
Behavior can be changed if costs are not being controlled by management

17. Thank You!!!
(Applause Please)