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UNIT3 - PRODUCTION AND INVENTORY CYCLE - Coggle Diagram
UNIT3 - PRODUCTION AND INVENTORY CYCLE
LESSON 1: PRODUCTION AND THE DOCUMENTS USED IN THE CYCLE
Customer production order:
A document produced for a specific order where
the manufacture is to customer specifications
Inventory production order:
Document for bulk production
Raw material issues slip:
Records raw material issue to production
Customer Job Card/Inventory Job card:
Records machine & human hours for specific
customer
Job transfer/inventory movement sheet:
Document authorizing the transfer of WIP to next
stage of production
Inventory Master file:
Records detail of all inventory movement of different
classes of inventory
Daily Production report:
Detail of each job in process - raw materials, time
and accumulated costs.
Completed production report:
Total costs of raw material, time, quantity of goods
and overheads allocated of completed jobs.
Transfer to finished goods note:
Records the transfer of manufactured goods from the
production department into the finished goods stores.
Picking slip and delivery notes:
To select goods ordered from the stores and to assist
in controlling the movements of goods once they have been sold.
Inventory count sheet:
Used during an inventory count.
Inventory adjustment form:
Sequenced documents which is used to record
adjustments to inventory.
These are the main functions:
Production planning and design which is the design
of items to be manufactured, production planning and control
Production processing which is:
Issued of raw materials to production process
movement of goods through production process
transfer of manufactured goods to finished goods
Inventory management:
receipt and recording of manufactured/purchased goods
storage of inventory and maintenance of records.
LESSON 2: PRODUCTION PLANNING AND DESIGN
Typically commence with due authorisation by the planning department of either a pre numbered CPO or IPO.
Both are likely to be based on established trends for the replenishment of goods.
To ensure appropriate segregations of duties, production order should be formally authorised by the production planning department before acceptance by the production processing department.
Once the production manager accepts the CPO or IPO inventory job card would be generated by the production department:
Raw material used
direct hours worked by production staff
machine hours
as the goods move through production process, each person responsible for the specific part of the production process should sign of the document evidencing goods produced are transferred to the next stage.
A daily production report of all jobs in process should be produced and copies distributed
LESSON 3: PRODUCTION PROCESS
The pre-numbered raw material issued slip is a request
for the issue of raw materials required for a particular production run.
It should be prepared either by the production planning department or more likely the production department or factory manager.
All such issues to production must be accounted for as allocated to the particular work in process CJC or IJC.
All raw materials issued to production should be listed on the daily production report and a copy sent to the raw materials store staff.
Movement of components through the production process as work in process.
Time spent on each stage of production, by production employees or in machine time should be captured onto the relevant CJC or IJC.
At the end of each day, the total time recorded on job cards should be reconciled to the total hours worked by production staff.
The shift foreman or production manager should be assigned the responsibility of inspecting that each stage of production process has been properly completed before goods pass to the next stage.
LESSON 4: INVENTORY MANAGEMENT AND INVENTORY COUNT
This would include the recording of:
Direct material costs of raw materials and
consumables to work in process.
Direct payroll costs based on hours worked, allocate
to the relevant job or production run
An overhead allocation for each job or production run
based on labour hours or machine hours worked,
depending on the nature of the production process and
practices of the entity in prior years.
The transfer of accumulating costs between production stages or departments in work in process.
The transfer of the final cost of the finished goods manufactured to finished goods inventoyr
The Inventory management system is made up
of four main controls:
Production entries must be supported by the relevant documents.
Storage and dispatch of manufacturing inventoyr.
Maintenance of inventory master files.
Physical and monitoring controls.
LESSON 5: INTERNAL CONTROLS AND CONTROL OBJECTIVES IN THE CYCLE
General controls:
Supervision and review
segregation of duties
Rotation of duties
Personnel take leave regularly
Management control
Internal audit
Sufficient stationery control
Scrutinize all records and documents for extraordinary items
Test castings and calculations on all selected items, documents and ledger accounts.
Safeguarding:
Completeness, Existence
Inventory should be safeguarded against theft and damage
Issued of raw materials to production:
Completeness, Validity
Inventory only leaves the storeroom based on properly authorized documentation.
Recording:
Completeness, Accuracy
All inventory is accurately recorded at the correct quantity and prices