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Production and Inventory cycle, Test of controls - Coggle Diagram
Production and Inventory cycle
Documents in cycle
Customer production order
Inventory Production Order
Raw material issue slip
Customer job card / Inventory job card
Job transfer / inventory movement sheet
Inventory master files
Daily production report
Completed production report
Transfer to finished goods note
Picking slip and delivery notes
Inventory count sheet
Inventory adjustment form
Production
Planning and design
Authorisation from production planning department of either an IPO or CPO - usually based on demand or reorder levels
Production Process
Acceptance of order by production processing department - sign as proof of approval
CJC or IJC generated to capture all costs involved in the production process eg: Raw materials, direct labour hours, machine hours
Labour hours: can write time on the card. End of day total time recorded on the job cards should be reconciled to total hours worked by production staff.
Raw materials issued should be recorded on the JC
Shift foreman / supervisor should check that each part of the process is compelted properly prior to transferring to next stage.
As goods move through the process each function needs to sign indicating transfer to next stage
Daily production report produced and copies distributed to the production planning department and the production manager. Report should bring to light any unusual charges allocated.
1b. Raw materials issue slip prepared
Transfer of goods to inventory
Once production complete, quality control inspection should take place prior to transfer to inventory
JC capturing raw materials, labour machine hours worked, overhead allocations should be inspected by production manager and compared to the details on the completed production report.
Any variances from standard costs or unexpected items should be authorised by the production manager prior to transfer to inventory
Production manager should authorise by signature, the transfer of finished goods to inventory.
Acceptance of finished goods should be acknowledged by signing of the completed production report by inventory staff.
Test of controls
General
Supervision and review
Segregation of duties
Rotation of duties
Regular leave
Mangerment control
Internal audit
Stationery control
Scrutinise docs for extraordinary items
Test castings and calcs on selected samples
Issue of raw materials
Completeness
Validity
Recording of inventory
COmpleteness
Accuracy
Safegaurding
Completeness
Existence