Flowchart 1



Flowchart 1

Major Information Flows in the Production Process

This systems flowchart shows the positioning of the production process as it interfaces with the Planning Control, Sales/Collections, and Acquisition/Payment Processes. This flowchart has several exit and entry points. This narrative will begin at 1.

1. In the Planning Control Process, management produces a Cost Standards document that would include all cost standards. These would include overhead rate, standard material, labor use, labor rate and efficiency to name a few. In the Production process, the cost standard document would be entered into the standard costs master file.

2. In the Sales/ Collections Process, we produce a sales order. The sales order would go to the Production Process to indicate how much product has been ordered. Finished goods inventory is queried. If the quantity of finished goods is insufficient to fill the order, then the remainder needs to be produced. New production is initiated by the production order.

3. To begin production, the Raw Materials Inventory Management reviews the Raw Materials Inventory Master File. The Inventory management initiates a purchase order when more material is needed (purchasing done by the Acquisitions/Payment Process).

4. The receiving report and vendor invoice enter from Acquisitions/Payment Process and would be updated into the Raw Material Inventory Master File when Acquisition/Payment receives the materials. The Raw Materials Inventory Master File in the Production Process would include both Direct and Indirect Materials. Direct materials are directly traceable and material to the final product. Indirect materials are used to help make the product, but do not become part of the finished product. The Raw Materials Inventory Master File is updated with raw materials quantity and new products. Raw Materials are debited when goods are received.

5. The Raw Material Inventory Status Report is printed from the Raw Materials Inventory Master File.

6. The Standard Cost Master File, Raw Materials Inventory Master File, and the Time Card/Labor ticket (from the Acquisitions/Payment Process) are used by cost accounting to begin accumulating production cost in the Work in Process master file. Material Costs and Labor costs are kept separate. The standard cost file is used to retrieve the budgeted amounts of labor and material that are needed. The time card document inputs direct and indirect labor into Work in Process. The production order authorizes production to begin through Production Management and Work in Process.

7. The Cost Activity or Standard Cost Variances Report is printed by cost accounting.

9. The Work in Process Inventory Status Report is printed from the Work In Process Inventory Master File. This report is simply a hard copy of the file contents.

10. When production is complete, total production cost is transferred from Work in Process (Cr) to the Finished Goods Inventory Master File (Dr).

11. The Finished Goods Inventory Status Report is printed from the Finished Goods Inventory Master File.

12. When the products are sold, inventory cost is moved from the Finished Goods Inventory Master File to the Cost of Goods Sold Master File, (in the Sales/Collections Process). Cost of Goods sold is debited and inventory is credited.

13. Finished goods can also go back into Finished Goods Inventory Management and production order. What is happening here? When product recalls or other defects with the product occur, Finished Goods Inventory Management produces another production order, and puts the product back into manufacture where it is fixed.

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