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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.
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 Cost Accounting General Ledger
1
Factor Availability Report Factor Availability Report
Raw Materials and Finished Goods
11
Post to WIP records
1 Production Order 2
2 Production Order
1 Production Order
6
Journal Voucher
Journal Voucher
4
1 Material Requisition 1 Material Requisition 2 3 4 2 Material Requisition 3
1 Material Requisition
12 7
N
Conversion Costs
3
N
13
Journal Voucher
Journal Voucher
1 Production Schedule 2
1 Production Schedule
Post to WIP records
5 9
D Job T ime Cards
10
Production Status
14
Cost of Goods Manufactured
Journal Voucher
Journal Voucher
Management M
15
Step 1
Prior to any production, Inventory Control Department and Production Department each performs a routine procedure.
Production Control
Inventory Status Report
Production Department
Inventory Control
Inventory Status Report
Step 1
Production Control
Inventory Status Report
Production Department
Inventory Control
Inventory Status 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
Inventory Status Report
Production Department
Inventory Control
Inventory Status 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 Cost Accounting General Ledger
1
Factor Availability Report Factor Availability Report
Raw Materials and Finished Goods
11
Post to WIP records
1 Production Order 2
2 Production Order
1 Production Order
6
Journal Voucher
Journal Voucher
4
1 Material Requisition 1 Material Requisition 2 3 4 2 Material Requisition 3
1 Material Requisition
12 7
N
Conversion Costs
3
N
13
Journal Voucher
Journal Voucher
1 Production Schedule 2
1 Production Schedule
Post to WIP records
5 9
D Job T ime Cards
10
Production Status
14
Cost of Goods Manufactured
Journal Voucher
Journal Voucher
Management M
15
Step 2
Production Control
Production Order 1
2 3
Production Department
Production Order 2
Cost Accounting
Production Order 1
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 Cost Accounting General Ledger
1
Factor Availability Report Factor Availability Report
Raw Materials and Finished Goods
11
Post to WIP records
1 Production Order 2
2 Production Order
1 Production Order
6
Journal Voucher
Journal Voucher
4
1 Material Requisition 1 Material Requisition 2 3 4 2 Material Requisition 3
1 Material Requisition
12 7
N
Conversion Costs
3
N
13
Journal Voucher
Journal Voucher
1 Production Schedule 2
1 Production Schedule
Post to WIP records
5 9
D Job T ime Cards
10
Production Status
14
Cost of Goods Manufactured
Journal Voucher
Journal Voucher
Management M
15
Step 3
Production Control
Material Req.
1 2 3 4
Production Department
Inventory Control
Material Req.
1 2 3
Cost Accounting
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 Cost Accounting General Ledger
1
Factor Availability Report Factor Availability Report
Raw Materials and Finished Goods
11
Post to WIP records
1 Production Order 2
2 Production Order
1 Production Order
6
Journal Voucher
Journal Voucher
4
1 Material Requisition 1 Material Requisition 2 3 4 2 Material Requisition 3
1 Material Requisition
12 7
N
Conversion Costs
3
N
13
Journal Voucher
Journal Voucher
1 Production Schedule 2
1 Production Schedule
Post to WIP records
5 9
D Job T ime Cards
10
Production Status
14
Cost of Goods Manufactured
Journal Voucher
Journal Voucher
Management M
15
Step 4
Production Control Production Department
Material Req.
2
Inventory Control
Material Req.
1 2 3
Cost Accounting
Material Req.
1
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
Production Flowchart
Production Control Production Department Inventory Control Cost Accounting General Ledger
1
Factor Availability Report Factor Availability Report
Raw Materials and Finished Goods
11
Post to WIP records
1 Production Order 2
2 Production Order
1 Production Order
6
Journal Voucher
Journal Voucher
4
1 Material Requisition 1 Material Requisition 2 3 4 2 Material Requisition 3
1 Material Requisition
12 7
N
Conversion Costs
3
N
13
Journal Voucher
Journal Voucher
1 Production Schedule 2
1 Production Schedule
Post to WIP records
5 9
D Job T ime Cards
10
Production Status
14
Cost of Goods Manufactured
Journal Voucher
Journal Voucher
Management M
15
Step 5
Production Control
Production Schedule 1
2
Production Department
Production 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.
Production Flowchart
Production Control Production Department Inventory Control Cost Accounting General Ledger
1
Factor Availability Report Factor Availability Report
Raw Materials and Finished Goods
11
Post to WIP records
1 Production Order 2
2 Production Order
1 Production Order
6
Journal Voucher
Journal Voucher
4
1 Material Requisition 1 Material Requisition 2 3 4 2 Material Requisition 3
1 Material Requisition
12 7
N
Conversion Costs
3
N
13
Journal Voucher
Journal Voucher
1 Production Schedule 2
1 Production Schedule
Post to WIP records
5 9
D Job T ime Cards
10
Production Status
14
Cost of Goods Manufactured
Journal Voucher
Journal Voucher
Management M
15
Step 6
Inventory Control
Journal Voucher
General Ledger
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 Cost Accounting General Ledger
1
Factor Availability Report Factor Availability Report
Raw Materials and Finished Goods
11
Post to WIP records
1 Production Order 2
2 Production Order
1 Production Order
6
Journal Voucher
Journal Voucher
4
1 Material Requisition 1 Material Requisition 2 3 4 2 Material Requisition 3
1 Material Requisition
12 7
N
Conversion Costs
3
N
13
Journal Voucher
Journal Voucher
1 Production Schedule 2
1 Production Schedule
Post to WIP records
5 9
D Job T ime Cards
10
Production Status
14
Cost of Goods Manufactured
Journal Voucher
Journal Voucher
Management M
15
Step 7
Production Department
Production Order 2
Inventory Control
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 Cost Accounting General Ledger
1
Factor Availability Report Factor Availability Report
Raw Materials and Finished Goods
11
Post to WIP records
1 Production Order 2
2 Production Order
1 Production Order
6
Journal Voucher
Journal Voucher
4
1 Material Requisition 1 Material Requisition 2 3 4 2 Material Requisition 3
1 Material Requisition
12 7
N
Conversion Costs
3
N
13
Journal Voucher
Journal Voucher
1 Production Schedule 2
1 Production Schedule
Post to WIP records
5 9
D Job T ime Cards
10
Production Status
14
Cost of Goods Manufactured
Journal Voucher
Journal Voucher
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 Cost Accounting General Ledger
1
Factor Availability Report Factor Availability Report
Raw Materials and Finished Goods
11
Post to WIP records
1 Production Order 2
2 Production Order
1 Production Order
6
Journal Voucher
Journal Voucher
4
1 Material Requisition 1 Material Requisition 2 3 4 2 Material Requisition 3
1 Material Requisition
12 7
N
Conversion Costs
3
N
13
Journal Voucher
Journal Voucher
1 Production Schedule 2
1 Production Schedule
Post to WIP records
5 9
D Job T ime Cards
10
Production Status
14
Cost of Goods Manufactured
Journal Voucher
Journal Voucher
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 Cost Accounting General Ledger
1
Factor Availability Report Factor Availability Report
Raw Materials and Finished Goods
11
Post to WIP records
1 Production Order 2
2 Production Order
1 Production Order
6
Journal Voucher
Journal Voucher
4
1 Material Requisition 1 Material Requisition 2 3 4 2 Material Requisition 3
1 Material Requisition
12 7
N
Conversion Costs
3
N
13
Journal Voucher
Journal Voucher
1 Production Schedule 2
1 Production Schedule
Post to WIP records
5 9
D Job T ime Cards
10
Production Status
14
Cost of Goods Manufactured
Journal Voucher
Journal Voucher
Management M
15
Step 10
Production Control
Production Status
Production Department
Production Status
Production Control receives a Production Status Report from the Production Dept.
Production Flowchart
Production Control Production Department Inventory Control Cost Accounting General Ledger
1
Factor Availability Report Factor Availability Report
Raw Materials and Finished Goods
11
Post to WIP records
1 Production Order 2
2 Production Order
1 Production Order
6
Journal Voucher
Journal Voucher
4
1 Material Requisition 1 Material Requisition 2 3 4 2 Material Requisition 3
1 Material Requisition
12 7
N
Conversion Costs
3
N
13
Journal Voucher
Journal Voucher
1 Production Schedule 2
1 Production Schedule
Post to WIP records
5 9
D Job T ime Cards
10
Production Status
14
Cost of Goods Manufactured
Journal Voucher
Journal Voucher
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 Cost Accounting General Ledger
1
Factor Availability Report Factor Availability Report
Raw Materials and Finished Goods
11
Post to WIP records
1 Production Order 2
2 Production Order
1 Production Order
6
Journal Voucher
Journal Voucher
4
1 Material Requisition 1 Material Requisition 2 3 4 2 Material Requisition 3
1 Material Requisition
12 7
N
Conversion Costs
3
N
13
Journal Voucher
Journal Voucher
1 Production Schedule 2
1 Production Schedule
Post to WIP records
5 9
D Job T ime Cards
10
Production Status
14
Cost of Goods Manufactured
Journal Voucher
Journal Voucher
Management M
15
Step 12
Cost Accounting
Post to WIP Records
Material Req.
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 Cost Accounting General Ledger
1
Factor Availability Report Factor Availability Report
Raw Materials and Finished Goods
11
Post to WIP records
1 Production Order 2
2 Production Order
1 Production Order
6
Journal Voucher
Journal Voucher
4
1 Material Requisition 1 Material Requisition 2 3 4 2 Material Requisition 3
1 Material Requisition
12 7
N
Conversion Costs
3
N
13
Journal Voucher
Journal Voucher
1 Production Schedule 2
1 Production Schedule
Post to WIP records
5 9
D Job T ime Cards
10
Production Status
14
Cost of Goods Manufactured
Journal Voucher
Journal Voucher
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 Cost Accounting General Ledger
1
Factor Availability Report Factor Availability Report
Raw Materials and Finished Goods
11
Post to WIP records
1 Production Order 2
2 Production Order
1 Production Order
6
Journal Voucher
Journal Voucher
4
1 Material Requisition 1 Material Requisition 2 3 4 2 Material Requisition 3
1 Material Requisition
12 7
N
Conversion Costs
3
N
13
Journal Voucher
Journal Voucher
1 Production Schedule 2
1 Production Schedule
Post to WIP records
5 9
D Job T ime Cards
10
Production Status
14
Cost of Goods Manufactured
Journal Voucher
Journal Voucher
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 Cost Accounting General Ledger
1
Factor Availability Report Factor Availability Report
Raw Materials and Finished Goods
11
Post to WIP records
1 Production Order 2
2 Production Order
1 Production Order
6
Journal Voucher
Journal Voucher
4
1 Material Requisition 1 Material Requisition 2 3 4 2 Material Requisition 3
1 Material Requisition
12 7
N
Conversion Costs
3
N
13
Journal Voucher
Journal Voucher
1 Production Schedule 2
1 Production Schedule
Post to WIP records
5 9
D Job T ime Cards
10
Production Status
14
Cost of Goods Manufactured
Journal Voucher
Journal Voucher
Management M
15
Step 15
Cost Accounting
Completed Production Order 2
General Ledger
M
Management M
Production Flowchart
Production Control Production Department Inventory Control Cost Accounting General Ledger
1
Factor Availability Report Factor Availability Report
Raw Materials and Finished Goods
11
Post to WIP records
1 Production Order 2
2 Production Order
1 Production Order
6
Journal Voucher
Journal Voucher
4
1 Material Requisition 1 Material Requisition 2 3 4 2 Material Requisition 3
1 Material Requisition
12 7
N
Conversion Costs
3
N
13
Journal Voucher
Journal Voucher
1 Production Schedule 2
1 Production Schedule
Post to WIP records
5 9
D Job T ime Cards
10
Production Status
14
Cost of Goods Manufactured
Journal Voucher
Journal Voucher
Management M
15