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I.

Conversion Cycle Process

1. Materials and Operations Requirement.


Raw materials are stored in the warehouse and are monitored by the
warehouse manager. He is also responsible in preparing an order list for the
purchase of additional raw materials, in case the materials in the warehouse
are insufficient for the next production. The quantity of raw materials in the
warehouse is listed in a notebook and is updated by the warehouse manager
at the end of the day.

2. Production Scheduling
The production manager is responsible in determining the quantity of goods
to be produced, subject to the approval of the sales and purchasing manager.

3. Perform Production Operations


The production manager picks raw materials from the warehouse to be used
in the production. The production manager does not prepare any documents,
such as move tickets, work order and materials requisition, because he is also
the warehouse manager.

4. Inventory Control
The warehouse manager is responsible in monitoring the quantity of raw
materials and finished goods in the warehouse. The notebook for the
inventory of raw materials is updated upon the receipt of raw materials
purchased and upon the picking of raw materials for the production.

The notebook for the finished goods is updated upon the end of the
production process and every delivery.

5. Perform Cost Accounting


The cost of the finished goods is identified by the sales manager based on the
prices of the same goods in the market. Increase of prices incurs only when
there is a dramatic increase in the prices of raw materials
II. Document Flowchart
Conversion Cycle Flowchart
Production and Warehouse Sales and Purchase
Department Department

Determine Production List


Products to
be
Approved
Produced
and Create Order List 2
Production
List Approved
Production
List

Production List

Approved
Production List
Approved
Production List

Convert
Direct
Material to
Finished Inventory
Goods, Records
Update
Inventory
and Deliver
Goods

N
Approved
Production List