Production Cycle: Kevin Ma Steven Radcliff Jie Chen Ernesto Pena Bryan Vien

Production Cycle
PRODUCTION FLOWCHART: PAGE 3
Kevin Ma
Steven Radcliff
Jie Chen
Ernesto Pena
Bryan Vien
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.
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.
Production Flowchart
Production Production Inventory Cost General
Control Department Control Accounting Ledger
Inventory Inventory
Status Report Status Report
1
Raw Materials and Finished

Goods
11
Factor Factor
Availability Availability
Report Report Post to WIP records
1 1
Production Order 2 2 Production Order Materials Placed in Production
2 3 Production Order 6
Journal Voucher Journal Voucher
Post to WIP records

4
1 1 1
Material Requisition 2 Material Requisition 2 Material Requisition
3 2 3
Material Requisition
4
12
3 7
Conversion Costs
N 13
N
Attach to completed Production
Order
1 1
Production Schedule 2 Production Schedule
Post to WIP records
5
9
D
Job T ime Cards Job T ime Cards
Post to Inventory records Sum m arize Production
10 Production Status Production Status

2 2
14
Completed Production Completed Production
5 Order Order Cost of Goods Manufactured
8 Journal Voucher Journal Voucher
2
Completed Production M
Order
Management
M
15
Step 1
Prior to any production, Inventory

Control Department and
Production Department each
performs a routine procedure.
Production Production Inventory

Control Department Control
Inventory Inventory
Factor Factor
Report Report
Step 1
Inventory Inventory
Factor Factor
Report Report
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.
Step 1
Inventory Inventory
Factor Factor
Report Report
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.
Inventory Inventory
1

Goods
11
Factor Factor
1 1
Post to WIP records

4
1 1 1
3 2 3
4
12
3 7
Conversion Costs
N 13
N
Order
1 1
Post to WIP records
5
9
D

2 2
14
2
Order
Management
M
15
Step 2
Production Production Cost
Control Department Accounting
Production Order 1 Production Order 1
2 Production Order 2
3
Completed
Production Order
Production Control Department issues production

orders which authorize the unit production.
a. A copy of the P.O. is sent to Cost Accounting
Department.
b. Another copy of the P.O. is sent to the
Production Dept. which authorizes them to
produce the order.
c. The last copy of the P.O. is filed numerically in
Production Control Department.
Inventory Inventory
1

Goods
11
Factor Factor
1 1
Post to WIP records

4
1 1 1
3 2 3
4
12
3 7
Conversion Costs
N 13
N
Order
1 1
Post to WIP records
5
9
D

2 2
14
2
Order
Management
M
15
Step 3
Production Production Inventory Cost
Control Department Control Accounting
Material Req. 1 Material Req. 1
2 2
3 3
4
Production Control issues material requisition.
a. Production Control send 3 copies of the

Material Requisition to inventory control.
b. The 4th copy of the Material Requisition is

filed numerically in Production Control.
Inventory Inventory
1

Goods
11
Factor Factor
1 1
Post to WIP records

4
1 1 1
3 2 3
4
12
3 7
Conversion Costs
N 13
N
Order
1 1
Post to WIP records
5
9
D

2 2
14
2
Order
Management
M
15
Step 4
Production Production Inventory Cost
Control Department Control Accounting
Material Req. 1 Material Req. 1
Material Req. 2 2
3
Inventory Control receives 3 copies of the

Material Requisition from Production Control.
a. 1 copy goes to Cost Accounting.
b. Another goes to the Production Dept.

along with the requested amount of raw
materials.
c. The last copy is filed numerically in

Inventory Control to keep track of the
inflows and outflows of raw materials
Inventory Inventory
1

Goods
11
Factor Factor
1 1
Post to WIP records

4
1 1 1
3 2 3
4
12
3 7
Conversion Costs
N 13
N
Order
1 1
Post to WIP records
5
9
D

2 2
14
2
Order
Management
M
15
Step 5
Production Production
Control Department
2
Schedule 1 Schedule 1
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.
Inventory Inventory
1

Goods
11
Factor Factor
1 1
Post to WIP records

4
1 1 1
3 2 3
4
12
3 7
Conversion Costs
N 13
N
Order
1 1
Post to WIP records
5
9
D

2 2
14
2
Order
Management
M
15
Step 6
Inventory General
Control Ledger
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.

Inventory Inventory
1

Goods
11
Factor Factor
1 1
Post to WIP records

4
1 1 1
3 2 3
4
12
3 7
Conversion Costs
N 13
N
Order
1 1
Post to WIP records
5
9
D

2 2
14
2
Order
Management
M
15
Step 7
Production Inventory
Department Control
Production Order 2
Production Order 2
Completed
Production Order 2
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.
Inventory Inventory
1

Goods
11
Factor Factor
1 1
Post to WIP records

4
1 1 1
3 2 3
4
12
3 7
Conversion Costs
N 13
N
Order
1 1
Post to WIP records
5
9
D

2 2
14
2
Order
Management
M
15
Step 8
Inventory Cost
control Accounting
Completed Completed
Production Order 2 Production Order 2
1. 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.
Inventory Inventory
1

Goods
11
Factor Factor
1 1
Post to WIP records

4
1 1 1
3 2 3
4
12
3 7
Conversion Costs
N 13
N
Order
1 1
Post to WIP records
5
9
D

2 2
14
2
Order
Management
M
15
Step 9
Production Cost
Department Accounting
Job Time Card Job Time Card
1. The Production Dept. sends the Job Time

Cards to Cost Accounting to calculate Labor
Costs.
a. Cost Accounting posts to WIP records.
b. Direct Labor Cost
c. Indirect Labor Cost
Inventory Inventory
1

Goods
11
Factor Factor
1 1
Post to WIP records

4
1 1 1
3 2 3
4
12
3 7
Conversion Costs
N 13
N
Order
1 1
Post to WIP records
5
9
D

2 2
14
2
Order
Management
M
15
Step 10
Control Department
Production Status Production Status
Production Control receives a Production

Status Report from the Production Dept.
Inventory Inventory
1

Goods
11
Factor Factor
1 1
Post to WIP records

4
1 1 1
3 2 3
4
12
3 7
Conversion Costs
N 13
N
Order
1 1
Post to WIP records
5
9
D

2 2
14
2
Order
Management
M
15
Step 11
Cost
Accounting
Post to WIP Records
Production Order 1
Cost Accounting posts the Production Order

to WIP records.
The Production order was received from

Inventory Control earlier in step (2).
Inventory Inventory
1

Goods
11
Factor Factor
1 1
Post to WIP records

4
1 1 1
3 2 3
4
12
3 7
Conversion Costs
N 13
N
Order
1 1
Post to WIP records
5
9
D

2 2
14
2
Order
Management
M
15
Step 12
Cost
Accounting
Post to WIP Records
Material Req. 1
Cost Accounting posts the Material

Requisition to WIP records.
The Material Requisition was received from

Inventory Control in step (4).
Inventory Inventory
1

Goods
11
Factor Factor
1 1
Post to WIP records

4
1 1 1
3 2 3
4
12
3 7
Conversion Costs
N 13
N
Order
1 1
Post to WIP records
5
9
D

2 2
14
2
Order
Management
M
15
Step 13
Cost General
Accounting Ledger
1. Cost Accounting updates the General

Ledger by using a Journal Voucher to record
Conversion Costs
= Direct Labor + Manufacturing
Cost Overhead Cost
Inventory Inventory
1

Goods
11
Factor Factor
1 1
Post to WIP records

4
1 1 1
3 2 3
4
12
3 7
Conversion Costs
N 13
N
Order
1 1
Post to WIP records
5
9
D

2 2
14
2
Order
Management
M
15
Step 14
Cost General
Accounting Ledger
1. 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
Inventory Inventory
1

Goods
11
Factor Factor
1 1
Post to WIP records

4
1 1 1
3 2 3
4
12
3 7
Conversion Costs
N 13
N
Order
1 1
Post to WIP records
5
9
D

2 2
14
2
Order
Management
M
15
Step 15
Cost General
Accounting Ledger
Completed M
Production Order 2
Management
Cost Accounting sends the Completed

Production Order to Management.
Inventory Inventory
1

Goods
11
Factor Factor
1 1
Post to WIP records

4
1 1 1
3 2 3
4
12
3 7
Conversion Costs
N 13
N
Order
1 1
Post to WIP records
5
9
D

2 2
14
2
Order
Management
M
15
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
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.
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
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.
THANK YOU FOR
YOUR TIME!

Production Cycle: Kevin Ma Steven Radcliff Jie Chen Ernesto Pena Bryan Vien

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Production Cycle

PRODUCTION FLOWCHART: PAGE 3

Raw Materials and Finished

Journal Voucher Journal Voucher

Post to WIP records

Post to Inventory records Sum m arize Production

10 Production Status Production Status

8 Journal Voucher Journal Voucher

Prior to any production, Inventory

Production Production Inventory

Inventory Control Department performs a

This is to inform the Production Control

Production Department checks the

Factor Availability Report states the available

With these information, the Production

Raw Materials and Finished

Journal Voucher Journal Voucher

Post to WIP records

Post to Inventory records Sum m arize Production

10 Production Status Production Status

8 Journal Voucher Journal Voucher

Production Control Department issues production

Raw Materials and Finished

Journal Voucher Journal Voucher

Post to WIP records

Post to Inventory records Sum m arize Production

10 Production Status Production Status

8 Journal Voucher Journal Voucher

Production Control issues material requisition.

a. Production Control send 3 copies of the

b. The 4th copy of the Material Requisition is

Raw Materials and Finished

Journal Voucher Journal Voucher

Post to WIP records

Post to Inventory records Sum m arize Production

10 Production Status Production Status

8 Journal Voucher Journal Voucher

Inventory Control receives 3 copies of the

a. 1 copy goes to Cost Accounting.

b. Another goes to the Production Dept.

c. The last copy is filed numerically in

Raw Materials and Finished

Journal Voucher Journal Voucher

Post to WIP records

Post to Inventory records Sum m arize Production

10 Production Status Production Status

8 Journal Voucher Journal Voucher

Production Control sends a copy of the

The other copy of the Production Schedule

Raw Materials and Finished

Journal Voucher Journal Voucher

Post to WIP records

Post to Inventory records Sum m arize Production

10 Production Status Production Status

8 Journal Voucher Journal Voucher

Inventory Control creates a Journal Voucher

Journal Voucher updates general ledger.

Raw Materials and Finished

Journal Voucher Journal Voucher

Post to WIP records

Post to Inventory records Sum m arize Production

10 Production Status Production Status

8 Journal Voucher Journal Voucher