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
Control
Production
Department
Inventory
Control
Inventory
Status Report
Cost
Accounting
General
Ledger
Inventory
Status Report
1
Factor
Availability
Report
Raw Materials and Finished
Goods
Factor
Availability
Report
1
Production Order
2
3
2
11
Post to WIP records
1
Production Order
2
Production Order
Materials Placed in Production
6
Journal Voucher
Journal Voucher
N
Post to WIP records
4
1
Material Requisition
1
Material Requisition 2
2
3
4
2
Material Requisition
1
Material Requisition
3
12
7
3
N
Conversion Costs
13
N
Attach to completed Production
Order
1
Production Schedule 2
Journal Voucher
Journal Voucher
1
Production Schedule
Post to WIP records
5
9
D
Job T ime Cards
Job T ime Cards
Post to Inventory records
10
Production Status
Sum m arize Production
Production Status
2
2
5
14
Completed Production
Order
Completed Production
Order
Cost of Goods Manufactured
8
Journal Voucher
Journal Voucher
2
Completed Production
Order
M
Management
M
15
Step 1
Prior to any production, Inventory
Control Department and
Production Department each
performs a routine procedure.
Production
Control
Production
Department
Inventory
Status Report
Factor
Availability
Report
Inventory
Control
Inventory
Status Report
Factor
Availability
Report
Step 1
Production
Control
Production
Department
Inventory
Status Report
Factor
Availability
Report
Inventory
Control
Inventory
Status Report
Factor
Availability
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
Production
Control
Production
Department
Inventory
Status Report
Factor
Availability
Report
Inventory
Control
Inventory
Status Report
Factor
Availability
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.
Production Flowchart
Production
Control
Production
Department
Inventory
Control
Inventory
Status Report
Cost
Accounting
General
Ledger
Inventory
Status Report
1
Factor
Availability
Report
Raw Materials and Finished
Goods
Factor
Availability
Report
1
Production Order
2
3
2
11
Post to WIP records
1
Production Order
2
Production Order
Materials Placed in Production
6
Journal Voucher
Journal Voucher
N
Post to WIP records
4
1
Material Requisition
1
Material Requisition 2
2
3
4
2
Material Requisition
1
Material Requisition
3
12
7
3
N
Conversion Costs
13
N
Attach to completed Production
Order
1
Production Schedule 2
Journal Voucher
Journal Voucher
1
Production Schedule
Post to WIP records
5
9
D
Job T ime Cards
Job T ime Cards
Post to Inventory records
10
Production Status
Sum m arize Production
Production Status
2
2
5
14
Completed Production
Order
Completed Production
Order
Cost of Goods Manufactured
8
Journal Voucher
Journal Voucher
2
Completed Production
Order
M
Management
M
15
Step 2
Production
Control
Production
Department
Production Order 1
Cost
Accounting
Production Order 1
2
Production Order 2
3
N
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.
Production Flowchart
Production
Control
Production
Department
Inventory
Control
Inventory
Status Report
Cost
Accounting
General
Ledger
Inventory
Status Report
1
Factor
Availability
Report
Raw Materials and Finished
Goods
Factor
Availability
Report
1
Production Order
2
3
2
11
Post to WIP records
1
Production Order
2
Production Order
Materials Placed in Production
6
Journal Voucher
Journal Voucher
N
Post to WIP records
4
1
Material Requisition
1
Material Requisition 2
2
3
4
2
Material Requisition
1
Material Requisition
3
12
7
3
N
Conversion Costs
13
N
Attach to completed Production
Order
1
Production Schedule 2
Journal Voucher
Journal Voucher
1
Production Schedule
Post to WIP records
5
9
D
Job T ime Cards
Job T ime Cards
Post to Inventory records
10
Production Status
Sum m arize Production
Production Status
2
2
5
14
Completed Production
Order
Completed Production
Order
Cost of Goods Manufactured
8
Journal Voucher
Journal Voucher
2
Completed Production
Order
M
Management
M
15
Step 3
Production
Control
Material Req.
Production
Department
1
Inventory
Control
Material Req.
2
Cost
Accounting
1
2
3
3
4
N
• 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.
Production Flowchart
Production
Control
Production
Department
Inventory
Control
Inventory
Status Report
Cost
Accounting
General
Ledger
Inventory
Status Report
1
Factor
Availability
Report
Raw Materials and Finished
Goods
Factor
Availability
Report
1
Production Order
2
3
2
11
Post to WIP records
1
Production Order
2
Production Order
Materials Placed in Production
6
Journal Voucher
Journal Voucher
N
Post to WIP records
4
1
Material Requisition
1
Material Requisition 2
2
3
4
2
Material Requisition
1
Material Requisition
3
12
7
3
N
Conversion Costs
13
N
Attach to completed Production
Order
1
Production Schedule 2
Journal Voucher
Journal Voucher
1
Production Schedule
Post to WIP records
5
9
D
Job T ime Cards
Job T ime Cards
Post to Inventory records
10
Production Status
Sum m arize Production
Production Status
2
2
5
14
Completed Production
Order
Completed Production
Order
Cost of Goods Manufactured
8
Journal Voucher
Journal Voucher
2
Completed Production
Order
M
Management
M
15
Step 4
Production
Control
Production
Department
Inventory
Control
Material Req.
Material Req.
Cost
Accounting
1
2
Material Req.
2
3
N
• 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
1
Production Flowchart
Production
Control
Production
Department
Inventory
Control
Inventory
Status Report
Cost
Accounting
General
Ledger
Inventory
Status Report
1
Factor
Availability
Report
Raw Materials and Finished
Goods
Factor
Availability
Report
1
Production Order
2
3
2
11
Post to WIP records
1
Production Order
2
Production Order
Materials Placed in Production
6
Journal Voucher
Journal Voucher
N
Post to WIP records
4
1
Material Requisition
1
Material Requisition 2
2
3
4
2
Material Requisition
1
Material Requisition
3
12
7
3
N
Conversion Costs
13
N
Attach to completed Production
Order
1
Production Schedule 2
Journal Voucher
Journal Voucher
1
Production Schedule
Post to WIP records
5
9
D
Job T ime Cards
Job T ime Cards
Post to Inventory records
10
Production Status
Sum m arize Production
Production Status
2
2
5
14
Completed Production
Order
Completed Production
Order
Cost of Goods Manufactured
8
Journal Voucher
Journal Voucher
2
Completed Production
Order
M
Management
M
15
Step 5
Production
Control
Production
Schedule 1
Production
Department
2
Production
Schedule 1
D
• 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.
Production Flowchart
Production
Control
Production
Department
Inventory
Control
Inventory
Status Report
Cost
Accounting
General
Ledger
Inventory
Status Report
1
Factor
Availability
Report
Raw Materials and Finished
Goods
Factor
Availability
Report
1
Production Order
2
3
2
11
Post to WIP records
1
Production Order
2
Production Order
Materials Placed in Production
6
Journal Voucher
Journal Voucher
N
Post to WIP records
4
1
Material Requisition
1
Material Requisition 2
2
3
4
2
Material Requisition
1
Material Requisition
3
12
7
3
N
Conversion Costs
13
N
Attach to completed Production
Order
1
Production Schedule 2
Journal Voucher
Journal Voucher
1
Production Schedule
Post to WIP records
5
9
D
Job T ime Cards
Job T ime Cards
Post to Inventory records
10
Production Status
Sum m arize Production
Production Status
2
2
5
14
Completed Production
Order
Completed Production
Order
Cost of Goods Manufactured
8
Journal Voucher
Journal Voucher
2
Completed Production
Order
M
Management
M
15
Step 6
Inventory
Control
General
Ledger
Journal Voucher
Journal Voucher
• 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.
Production Flowchart
Production
Control
Production
Department
Inventory
Control
Inventory
Status Report
Cost
Accounting
General
Ledger
Inventory
Status Report
1
Factor
Availability
Report
Raw Materials and Finished
Goods
Factor
Availability
Report
1
Production Order
2
3
2
11
Post to WIP records
1
Production Order
2
Production Order
Materials Placed in Production
6
Journal Voucher
Journal Voucher
N
Post to WIP records
4
1
Material Requisition
1
Material Requisition 2
2
3
4
2
Material Requisition
1
Material Requisition
3
12
7
3
N
Conversion Costs
13
N
Attach to completed Production
Order
1
Production Schedule 2
Journal Voucher
Journal Voucher
1
Production Schedule
Post to WIP records
5
9
D
Job T ime Cards
Job T ime Cards
Post to Inventory records
10
Production Status
Sum m arize Production
Production Status
2
2
5
14
Completed Production
Order
Completed Production
Order
Cost of Goods Manufactured
8
Journal Voucher
Journal Voucher
2
Completed Production
Order
M
Management
M
15
Step 7
Production
Department
Inventory
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.
Production Flowchart
Production
Control
Production
Department
Inventory
Control
Inventory
Status Report
Cost
Accounting
General
Ledger
Inventory
Status Report
1
Factor
Availability
Report
Raw Materials and Finished
Goods
Factor
Availability
Report
1
Production Order
2
3
2
11
Post to WIP records
1
Production Order
2
Production Order
Materials Placed in Production
6
Journal Voucher
Journal Voucher
N
Post to WIP records
4
1
Material Requisition
1
Material Requisition 2
2
3
4
2
Material Requisition
1
Material Requisition
3
12
7
3
N
Conversion Costs
13
N
Attach to completed Production
Order
1
Production Schedule 2
Journal Voucher
Journal Voucher
1
Production Schedule
Post to WIP records
5
9
D
Job T ime Cards
Job T ime Cards
Post to Inventory records
10
Production Status
Sum m arize Production
Production Status
2
2
5
14
Completed Production
Order
Completed Production
Order
Cost of Goods Manufactured
8
Journal Voucher
Journal Voucher
2
Completed Production
Order
M
Management
M
15
Step 8
Inventory
control
Completed
Production Order 2
Cost
Accounting
Completed
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.
Production Flowchart
Production
Control
Production
Department
Inventory
Control
Inventory
Status Report
Cost
Accounting
General
Ledger
Inventory
Status Report
1
Factor
Availability
Report
Raw Materials and Finished
Goods
Factor
Availability
Report
1
Production Order
2
3
2
11
Post to WIP records
1
Production Order
2
Production Order
Materials Placed in Production
6
Journal Voucher
Journal Voucher
N
Post to WIP records
4
1
Material Requisition
1
Material Requisition 2
2
3
4
2
Material Requisition
1
Material Requisition
3
12
7
3
N
Conversion Costs
13
N
Attach to completed Production
Order
1
Production Schedule 2
Journal Voucher
Journal Voucher
1
Production Schedule
Post to WIP records
5
9
D
Job T ime Cards
Job T ime Cards
Post to Inventory records
10
Production Status
Sum m arize Production
Production Status
2
2
5
14
Completed Production
Order
Completed Production
Order
Cost of Goods Manufactured
8
Journal Voucher
Journal Voucher
2
Completed Production
Order
M
Management
M
15
Step 9
Production
Department
Job Time Card
Cost
Accounting
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
Production Flowchart
Production
Control
Production
Department
Inventory
Control
Inventory
Status Report
Cost
Accounting
General
Ledger
Inventory
Status Report
1
Factor
Availability
Report
Raw Materials and Finished
Goods
Factor
Availability
Report
1
Production Order
2
3
2
11
Post to WIP records
1
Production Order
2
Production Order
Materials Placed in Production
6
Journal Voucher
Journal Voucher
N
Post to WIP records
4
1
Material Requisition
1
Material Requisition 2
2
3
4
2
Material Requisition
1
Material Requisition
3
12
7
3
N
Conversion Costs
13
N
Attach to completed Production
Order
1
Production Schedule 2
Journal Voucher
Journal Voucher
1
Production Schedule
Post to WIP records
5
9
D
Job T ime Cards
Job T ime Cards
Post to Inventory records
10
Production Status
Sum m arize Production
Production Status
2
2
5
14
Completed Production
Order
Completed Production
Order
Cost of Goods Manufactured
8
Journal Voucher
Journal Voucher
2
Completed Production
Order
M
Management
M
15
Step 10
Production
Control
Production
Department
Production Status
Production Status
Production Control receives a Production
Status Report from the Production Dept.
Production Flowchart
Production
Control
Production
Department
Inventory
Control
Inventory
Status Report
Cost
Accounting
General
Ledger
Inventory
Status Report
1
Factor
Availability
Report
Raw Materials and Finished
Goods
Factor
Availability
Report
1
Production Order
2
3
2
11
Post to WIP records
1
Production Order
2
Production Order
Materials Placed in Production
6
Journal Voucher
Journal Voucher
N
Post to WIP records
4
1
Material Requisition
1
Material Requisition 2
2
3
4
2
Material Requisition
1
Material Requisition
3
12
7
3
N
Conversion Costs
13
N
Attach to completed Production
Order
1
Production Schedule 2
Journal Voucher
Journal Voucher
1
Production Schedule
Post to WIP records
5
9
D
Job T ime Cards
Job T ime Cards
Post to Inventory records
10
Production Status
Sum m arize Production
Production Status
2
2
5
14
Completed Production
Order
Completed Production
Order
Cost of Goods Manufactured
8
Journal Voucher
Journal Voucher
2
Completed Production
Order
M
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).
Production Flowchart
Production
Control
Production
Department
Inventory
Control
Inventory
Status Report
Cost
Accounting
General
Ledger
Inventory
Status Report
1
Factor
Availability
Report
Raw Materials and Finished
Goods
Factor
Availability
Report
1
Production Order
2
3
2
11
Post to WIP records
1
Production Order
2
Production Order
Materials Placed in Production
6
Journal Voucher
Journal Voucher
N
Post to WIP records
4
1
Material Requisition
1
Material Requisition 2
2
3
4
2
Material Requisition
1
Material Requisition
3
12
7
3
N
Conversion Costs
13
N
Attach to completed Production
Order
1
Production Schedule 2
Journal Voucher
Journal Voucher
1
Production Schedule
Post to WIP records
5
9
D
Job T ime Cards
Job T ime Cards
Post to Inventory records
10
Production Status
Sum m arize Production
Production Status
2
2
5
14
Completed Production
Order
Completed Production
Order
Cost of Goods Manufactured
8
Journal Voucher
Journal Voucher
2
Completed Production
Order
M
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).
Production Flowchart
Production
Control
Production
Department
Inventory
Control
Inventory
Status Report
Cost
Accounting
General
Ledger
Inventory
Status Report
1
Factor
Availability
Report
Raw Materials and Finished
Goods
Factor
Availability
Report
1
Production Order
2
3
2
11
Post to WIP records
1
Production Order
2
Production Order
Materials Placed in Production
6
Journal Voucher
Journal Voucher
N
Post to WIP records
4
1
Material Requisition
1
Material Requisition 2
2
3
4
2
Material Requisition
1
Material Requisition
3
12
7
3
N
Conversion Costs
13
N
Attach to completed Production
Order
1
Production Schedule 2
Journal Voucher
Journal Voucher
1
Production Schedule
Post to WIP records
5
9
D
Job T ime Cards
Job T ime Cards
Post to Inventory records
10
Production Status
Sum m arize Production
Production Status
2
2
5
14
Completed Production
Order
Completed Production
Order
Cost of Goods Manufactured
8
Journal Voucher
Journal Voucher
2
Completed Production
Order
M
Management
M
15
Step 13
Cost
Accounting
Journal Voucher
General
Ledger
Journal Voucher
1. Cost Accounting updates the General
Ledger by using a Journal Voucher to record
Conversion Costs
= Direct Labor + Manufacturing
Cost
Overhead Cost
Production Flowchart
Production
Control
Production
Department
Inventory
Control
Inventory
Status Report
Cost
Accounting
General
Ledger
Inventory
Status Report
1
Factor
Availability
Report
Raw Materials and Finished
Goods
Factor
Availability
Report
1
Production Order
2
3
2
11
Post to WIP records
1
Production Order
2
Production Order
Materials Placed in Production
6
Journal Voucher
Journal Voucher
N
Post to WIP records
4
1
Material Requisition
1
Material Requisition 2
2
3
4
2
Material Requisition
1
Material Requisition
3
12
7
3
N
Conversion Costs
13
N
Attach to completed Production
Order
1
Production Schedule 2
Journal Voucher
Journal Voucher
1
Production Schedule
Post to WIP records
5
9
D
Job T ime Cards
Job T ime Cards
Post to Inventory records
10
Production Status
Sum m arize Production
Production Status
2
2
5
14
Completed Production
Order
Completed Production
Order
Cost of Goods Manufactured
8
Journal Voucher
Journal Voucher
2
Completed Production
Order
M
Management
M
15
Step 14
Cost
Accounting
Journal Voucher
General
Ledger
Journal Voucher
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
Production Flowchart
Production
Control
Production
Department
Inventory
Control
Inventory
Status Report
Cost
Accounting
General
Ledger
Inventory
Status Report
1
Factor
Availability
Report
Raw Materials and Finished
Goods
Factor
Availability
Report
1
Production Order
2
3
2
11
Post to WIP records
1
Production Order
2
Production Order
Materials Placed in Production
6
Journal Voucher
Journal Voucher
N
Post to WIP records
4
1
Material Requisition
1
Material Requisition 2
2
3
4
2
Material Requisition
1
Material Requisition
3
12
7
3
N
Conversion Costs
13
N
Attach to completed Production
Order
1
Production Schedule 2
Journal Voucher
Journal Voucher
1
Production Schedule
Post to WIP records
5
9
D
Job T ime Cards
Job T ime Cards
Post to Inventory records
10
Production Status
Sum m arize Production
Production Status
2
2
5
14
Completed Production
Order
Completed Production
Order
Cost of Goods Manufactured
8
Journal Voucher
Journal Voucher
2
Completed Production
Order
M
Management
M
15
Step 15
Cost
Accounting
General
Ledger
Completed
Production Order 2
M
Management
M
Cost Accounting sends the Completed
Production Order to Management.
Production Flowchart
Production
Control
Production
Department
Inventory
Control
Inventory
Status Report
Cost
Accounting
General
Ledger
Inventory
Status Report
1
Factor
Availability
Report
Raw Materials and Finished
Goods
Factor
Availability
Report
1
Production Order
2
3
2
11
Post to WIP records
1
Production Order
2
Production Order
Materials Placed in Production
6
Journal Voucher
Journal Voucher
N
Post to WIP records
4
1
Material Requisition
1
Material Requisition 2
2
3
4
2
Material Requisition
1
Material Requisition
3
12
7
3
N
Conversion Costs
13
N
Attach to completed Production
Order
1
Production Schedule 2
Journal Voucher
Journal Voucher
1
Production Schedule
Post to WIP records
5
9
D
Job T ime Cards
Job T ime Cards
Post to Inventory records
10
Production Status
Sum m arize Production
Production Status
2
2
5
14
Completed Production
Order
Completed Production
Order
Cost of Goods Manufactured
8
Journal Voucher
Journal Voucher
2
Completed Production
Order
M
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.
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 camera’s to monitor that
employees are where they say they
were
Control – have manager responsible for
time card accuracy from their specific
department
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.
THANK YOU FOR
YOUR TIME!