Production Cycle

Presented by: Group 10

Introduction
The production cycle is a recurring set of
business activities and related data processing
operations associated with the manufacture of
products.

Production
Cycle

Revenue
Cycle
Expenditure
Cycle
Human
Resource/Payr
oll Cycle
General
Ledger and
Reporting
System

OUTPUT

INPUT

Revenue
Cycle
Expenditure
Cycle
Human
Resource/Payr
oll Cycle

PROCESS

Flow of Information

Activities in the
Production Cycle

Product
Design

Planning
and
Scheduli
ng

Productio
n
Operatio
n

Cost
Accounti
ng
Production Cycle Activities

Key Documents and Forms in Product

Design

Bill of Materials
Operations List

Approaches to Production Planning

Manufacturing Resource Planning (MRP-II)
develops plans for up to 12 months ahead.
more appropriate for products with predictable demand and a
long life cycle.

Lean Manufacturing

uses shorter planning horizons.

more appropriate for products with unpredictable demand,
short life cycles, and frequent markdowns of excess inventory.

Key Documents and Forms in Planning

and Scheduling
Master
Materials
Production
production
Moverequisition
ticket
order
schedule

Types of Cost
Accounting
Job order costing
Process costing

Raw
materials

Manufacturi
ng
overhead

Cost
Accounti
ng
system

Direct labor

Machinery
and
equipment
usage

Data to be Accumulated

Control: Objectives,
Threats, and
Procedures

 In the production cycle (or any cycle), a well-designed AIS should

provide adequate controls to ensure that the following objectives are met:

All transactions are properly authorized.

All recorded transactions are valid.
All valid and authorized transactions are recorded.
All transactions are recorded accurately.
Assets are safeguarded from loss or theft.
Business activities are performed efficiently and effectively.
The company is in compliance with all applicable laws and regulations.
All disclosures are full and fair.

 What are some threats?

unauthorized transaction
theft or destruction of inventories and fixed assets
recording and posting errors
loss of data
inefficiencies and quality control problems

 What are some control procedures?

accurate sales forecasts and inventory records
authorization of production
restricted access to production planning program
and to blank production order documents
review and approval of capital asset expenditures

 documentation of all internal movements of inventory

proper segregation of duties
source data automation
online data entry edit controls
backup and disaster recovery procedures
regular performance reports
cost of quality control measurement

-END-