Ch14ed12romney

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  • Capital investment Raise capital/ Acquire property/ periodically report Input acquisition Obtain/ Receive / Record obligationn/ pay Conversion Consume labor materials and o/h Sales Receive order/ Deliver/ request payment/ receive payment
  • Ch14ed12romney

    1. 1. Ch. 14 -The Production Cycle
    2. 2. Cycle of Business Activities Capital Capital Investment Investment Financing Cycle Sale Revenue Cycle Input General Ledger and Acquisition Reporting SystemExpenditure Human Cycle Production Resource Cycle Payroll Cycle Hire & Conversion pay employees
    3. 3. Production Cycle Context Diagram Figure 14-1 Customer orders Purchase Revenue requisitions Expenditure Cycle Sales Cycle forecast Production Overhead/ Cycle Raw materials Finished goods COGM Labor needs G/L and Reports Reporting Labor H/R & System costs Payroll Management Cycle
    4. 4. Production Cycle Context Diagram Figure 14-1 Customer orders Revenue Cycle Sales forecast Production Cycle
    5. 5. Production Cycle Context Diagram Figure 14-1 Customer orders Purchase Revenue requisitions Expenditure Cycle Sales Cycle forecast Production Overhead/ Cycle Raw materials
    6. 6. Production Cycle Context Diagram Figure 14-1 Customer orders Purchase Revenue requisitions Expenditure Cycle Sales Cycle forecast Production Overhead/ Cycle Raw materials Finished goods Labor needs Labor H/R & costs Payroll Cycle
    7. 7. Production Cycle Context Diagram Figure 14-1 Customer orders Purchase Revenue requisitions Expenditure Cycle Sales Cycle forecast Production Overhead/ Cycle Raw materials Finished goods COGM Labor needs G/L and Reports Reporting Labor H/R & System costs Payroll Management Cycle
    8. 8. Production Cycle ActivitiesProduct designProduction planning and schedulingProduction OperationsCost Accounting
    9. 9. Product Design VCR Bill of MaterialsBill of materials Control Unit - 1» Exploded to determine Back Panel - 1 Side Panel - 4 production needs Timer - 1 Front Panel - 1 Screw - 6Operations list VCR Operations List(routing sheet) Assembly - .15 hour Finishing - .1 hour Testing - .2 hour
    10. 10. Production Cycle Level 0 Diagram Figure 14-2 abbreviated Costs Cost Accounting Operations List 1.0 Bill of materials Product Design
    11. 11. Planning & SchedulingMRP - II» Push manufacturing» long-term planningJIT» Pull (lean) manufacturing» short-term planning
    12. 12. Master Production ScheduleSpecifies what, when and howmuch to produce based oncustomer orders, sales forecastsand FG inventory levels“Explodes” bill of materials todetermine raw material needsProduces production order,materials requisition and move See Figure 14-6tickets
    13. 13. Production Cycle Level 0 Diagram – Figure 14-2Planning and Scheduling abbreviated Sales Forecasts Revenue Cycle Customer Orders 2.0 Planning and Scheduling Bill of materials Raw materials
    14. 14. Production Cycle Level 0 Diagram – Figure 14-2Planning and Scheduling abbreviated Sales Forecasts Revenue Cycle Customer Orders 2.0 Planning and Operations List Labor Scheduling Available Bill of materials HRM/ Payroll Cycle Raw materials
    15. 15. Production Cycle Level 0 Diagram – Figure 14-2Planning and Scheduling abbreviated Expenditure Cycle Purchase Requisitions 2.0 Planning and Scheduling Production orders, Material requisitions, And move 3.0 tickets Production orders Production Operations
    16. 16. Production Cycle Level 0 Diagram – Figure 14-2Planning and Scheduling abbreviated Sales Forecasts Expenditure Revenue Cycle Cycle Purchase Requisitions Customer Orders 2.0 Planning and Operations List Labor Scheduling Available Bill of materials HRM/ Payroll Cycle Production orders, Raw materials Material requisitions, And move 3.0 tickets Production orders Production Operations
    17. 17. Production Order Authorizes the start of production Identifies quantity to be produced, production departments required, and final destination Production Order -Job #100: 660 units of Item #3072 See Figure 14-7
    18. 18. Materials RequisitionAuthorizes release of raw materials intoproductionServes as source document for journal entrytransferring raw materials to WIPExploded bill of material Materials Requisition - (see Figure 14-8)
    19. 19. Accounting for Transfers of Materials Dr. Cr.Work in process inventory - Job #100 XX Raw materials inventory XX Materials Requisition for Job #100
    20. 20. Move TicketDocuments transfers of productionbetween departments Move Ticket Job #: 100 Moved from: Assembly Moved to: Finishing Quantity transferred: 675 units Time: 10/5 8:45 a.m. See Figure 14-9
    21. 21. Production OperationsTrack: •raw materials used •labor expended •machine operations performed •other manufacturing overhead costs incurred
    22. 22. I/T for Materials Handling•Bar-coding/conveyer belts•RFID tags Located by radio signal No scanning Up to 40X faster than bar codes Not affected by dirt Not required to be in line of sight Continuous monitoring capabilities
    23. 23. Production Cycle Level 0 Diagram – Figure 14-2Production Operations abbreviated 3.0 Job time tickets, Production move tickets and material requisitions, Operations 4.0 Cost Accounting Production orders, Material requisitions, 2.0 And move tickets Planning Production orders And Scheduling
    24. 24. Cost Accounting•Information for planning and control•Captures cost data•Calculates inventory and COGS•Job order vs. process costing
    25. 25. Accounting for Direct Labor Inputs Dr. Cr.Work in process inventory - Job #100 XX Direct Labor XX JobTicket Welding Dept.: Job #100 30 hours Job #100 30 hours Or on-line entry via terminals, badges or bar code readers
    26. 26. Allocating Overhead Dr. Cr.Work in process inventory - Job #100 XX Factory Overhead XX Activity base Predetermined (labor hours, Overhead Rate X # of setups, machine hours, etc.)
    27. 27. ABC Overhead AllocationBetter decisions/improved cost managementboth financial and nonfinancial measuresneed to be captured by the AISG/L may need to be completely revamped!
    28. 28. Transfers of Completed Goods Dr. Cr.Finished goods inventory - Item #3072 XX Work in process inventory - Job #100 XX Finished Goods Report Job #100 - 675 units
    29. 29. Cost Accounting System RecordsJob Cost LedgerJob #100 Job #101 - OR - Job Cost File
    30. 30. Cost Accounting System RecordsFixed Asset Records» ID #, Serial #, Location, Cost, Depreciation info» Formal procedures for competitive bids» RFID tags for preventive maintenance
    31. 31. Production Cycle Level 0 Diagram – Figure 14-2Cost Accounting abbreviated 4.0 Cost Operations List Labor Accounting Costs Bill of materials HRM/ Payroll Cycle Job time tickets, move tickets and 3.0 material requisitions Production Raw material Operations And Expenditure Overhead costs Cycle
    32. 32. Production Cycle Level 0 Diagram – Figure 14-2Cost Accounting abbreviated Revenue G/L and Cycle reporting system Cost of goods manufactured Finished Goods 4.0 Cost Accounting Work in process Finished goods
    33. 33. Production Cycle Level 0 Diagram – Figure 14-2Cost Accounting abbreviated Revenue G/L and Cycle reporting system Cost of goods manufactured Finished Goods 4.0 Cost Operations List Labor Accounting Costs Bill of materials HRM/ Payroll Work in process Cycle Job time tickets, move tickets and Finished goods 3.0 material requisitions Production Raw material Operations And Expenditure Overhead costs Cycle
    34. 34. Opportunities for ITCoded ID Cards/Badge Readers/ ElectronicTime ClocksOn-line Data EntryComputer-integrated Manufacturing (CIM)Real-Time Production Information» machine monitoring» production status» product recall» inventory management
    35. 35. Transaction AuthorizationProduction Materialsmanager/supervisor RequisitionauthorizesInventory controlreleases material
    36. 36. Security for Assets and RecordsRestricted physical accessGoods controlled and released onlyupon approved material requisitionor shipping requestDocumented material movementInsuranceBackup files/power and disasterrecovery proceduresAccess controls and encryption
    37. 37. Segregation of DutiesBetween: Inventory Records and Warehouse Production Factory and Control
    38. 38. Segregation of Duties Cost General and Accounting AccountingBoth are recording functions, so segregation of dutiesis not necessary. However, if one person maintainsthe job subsidiary ledger and another maintainsthe general ledger, it’s a check and balance when the WIPaccount is reconciled at the end of the month.So if you can segregate, do so.
    39. 39. Adequate Documents and RecordsPrenumbered andaccounted for(production orders,material requisitions,finished goods reports)Periodic counts ofinventory and fixedassets withreconciliation toperpetual records

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