The Production Business Process Chapter  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9–1 Learning Objective Describe transaction cycle controls that are used in the production business process  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9–2 Transaction Flow in a Production Control Application Production Production Control Departments Inventory Control Inventory status reports Inventory status reports Cost Accounting General Ledger Raw materials Finished goods Factor availability report Factor availability report  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9–3 Transaction Flow in a Production Control Application Production Production Control Departments Production order N Inventory Control Cost Accounting General Ledger Production order Production order Journal voucher Post to WIP records Completed Post to production inventory order records  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood Journal voucher Materials placed in production 9–4 Transaction Flow in a Production Control Application Production Production Control Departments Material requisition N Inventory Control Material requisition Attach to completed production order Material requisition N Cost Accounting General Ledger Material requisition Post to WIP records Completed Post to production inventory order records  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9–5 Transaction Flow in a Production Control Application Production Production Control Departments Production schedule Production schedule Inventory Control Cost Accounting General Ledger Journal voucher Journal voucher Conversion costs D Job time cards Job time cards Post to WIP records  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9–6 Transaction Flow in a Production Control Application Production Production Control Departments Production status Production status Inventory Cost Control Accounting Completed Completed production production order order General Ledger Summarize production Journal voucher Journal voucher Completed production cost report Cost of goods manufactured To management  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9–7 Cost Accounting The cost accounting department is responsible for maintaining a file of WIP records  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9–8 Inventory Control Inventory use Inventory balances Minimum and maximum levels of stock Reorder point Economic order quantity (EOQ)  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9–9 Inventory Control EOQ = 2×R×S P×I R = requirements for the item this period S = purchasing cost per order P = unit cost I = inventory carrying cost per period  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9– Production Scheduling Production status file Production status update Routing file Updated production status file Production loading file Summary report  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9– Production Scheduling Production loading file Summary report Production scheduling program Production schedules  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9– Production-Loading File This is the major input to the production-scheduling application  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9– Cost Accounting Production status file Production data file • Material requisition data • RTG data Cost accounting program(s) Summary report Updated production status file Completed production order file Resource usage file  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9– Reporting Inventory Processing Inventory file Updated inventory file Inventory update Finished goods stock status report Completed production cost report Completed production order file Summary report  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9– Reporting Resource Usage Reporting Report generator Resource usage file Resource usage reports  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9– Learning Objective Describe why activity-based costing is particularly relevant to CIM systems  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9– Activity-Based Costing Traditional cost accounting techniques may be inadequate in a computer integrated manufacturing environment Because CIM reduces direct labor and increases overhead Variable costs decrease and fixed costs increase  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9– Activity-Based Costing Activity-based costing (ABC) calculates several overhead rates, one for each manufacturing activity  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9– Activity-Based Costing What are some examples of activities? Machine centers Material handling Inspection stations Manual assembly A single department may contain several different activities  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9– Major Processing Modules in MRP II Bill-of-materials Bill-of-materials module module Master Masterproduction production scheduling scheduling module module Inventory Inventorycontrol control module module Routings Routingsfile file module module MRP MRPII II Production Productionorder order module module Production Production activity activitycontrol control module module  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9– Implementing JIT in a MRP II/CIM Environment Less emphasis might be placed on a complete MRP II system  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9– Special Internal Control Considerations Transactions may be processed without human intervention or approval This eliminates conventional controls associated with separation of duties in transactions  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9– Special Internal Control Considerations Extensive controls and audit trails may be implemented in quick-response manufacturing systems These features must be included within the design and development of the system Systems development is critical in quick-response manufacturing systems  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 9– End of Chapter  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood – 49 ... Publishing, Accounting Information Systems, 9/e, by Bodnar/ Hopwood 9– The Manufacturing Resource Planning (MRP II) System The MRP II system comprises the materials requirements planning (MRP) system and... Manufacturing Systems Quick-response Quick-response manufacturing manufacturing system system Computer Integrated Manufacturing System (CIM) Physical Physical manufacturing manufacturing system system... integrated manufacturing (CIM) systems  2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/ Hopwood 9– Quick-Response Manufacturing Systems Physical manufacturing system