Production Cycle

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Production Cycle
PRODUCTION FLOWCHART PAGE 3

• Kevin Ma
• Steven Radcliff
• Jie Chen
• Ernesto Pena
• Bryan Vien

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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.
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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.
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Production Flowchart
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Step 1

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

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Step 1

• 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.

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Step 1

• 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.

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Production Flowchart
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Step 2

• Production Control Department issues production
  orders which authorize the unit production.
• A copy of the P.O. is sent to Cost Accounting
  Department.
• Another copy of the P.O. is sent to the
  Production Dept. which authorizes them to produce
  the order.
• The last copy of the P.O. is filed numerically in
  Production Control Department.

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Production Flowchart
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Step 3

• Production Control issues material requisition.
• Production Control send 3 copies of the Material
  Requisition to inventory control.
• The 4th copy of the Material Requisition is filed
  numerically in Production Control.

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Production Flowchart
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Step 4

• Inventory Control receives 3 copies of the
  Material Requisition from Production Control.
• 1 copy goes to Cost Accounting.
• Another goes to the Production Dept. along with
  the requested amount of raw materials.
• The last copy is filed numerically in Inventory
  Control to keep track of the inflows and outflows
  of raw materials

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Production Flowchart
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Step 5

• 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.

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Production Flowchart
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Step 6

• 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.

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Production Flowchart
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Step 7

• 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.

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Production Flowchart
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Step 8

• 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 produced
• Quantity of material used
• b. It is sent to Cost Accounting
• i. To summarize production
• ii. Record unit cost/total cost/quantity etc.

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Production Flowchart
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Step 9

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

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Production Flowchart
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Step 10
Production Control receives a Production Status
Report from the Production Dept.
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Production Flowchart
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Step 11
Cost Accounting posts the Production Order to
WIP records. The Production order was received
from Inventory Control earlier in step (2).
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Production Flowchart
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Step 12
Cost Accounting posts the Material
Requisition to WIP records. The Material
Requisition was received from Inventory Control
in step (4).
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Production Flowchart
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Step 13

• Cost Accounting updates the General Ledger by
  using a Journal Voucher to record Conversion
  Costs
• Direct Labor Manufacturing
• Cost Overhead Cost

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Production Flowchart
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Step 14

• 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

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Production Flowchart
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Step 15
Cost Accounting sends the Completed Production
Order to Management.
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Production Flowchart
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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
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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.
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Threats and Controls (cont)

• 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 cameras to monitor that
employees are where they say they were
Control have manager responsible for time card
accuracy from their specific department
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Threats and Controls (cont)

• 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.
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THANK YOU FOR YOUR TIME!