Accounting Essay 2 pages must answer all questions
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romney_ais14_stppt_14.pptxAccounting Information Systems
Fourteenth Edition
Chapter 14
The Production Cycle
Copyright © 2018 Pearson Education, Inc. All Rights Reserved
Copyright © 2018 Pearson Education, Inc.
Chapter 14: The Production Cycle
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Learning Objectives (1 of 2)
Describe the major business activities and key decisions that must be made in the production cycle, the threats to accomplishing production cycle objectives, and the controls that can mitigate those threats.
Explain the key decisions and information needs in product design, the threats to those activities, and the controls that can mitigate those threats.
Explain the key decisions and information needs in planning and scheduling production, the threats to those activities, and the controls that can mitigate those threats.
Copyright © 2018 Pearson Education, Inc.
Chapter 14: The Production Cycle
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Learning Objectives (2 of 2)
Explain the key decisions and information needs in production operations, the threats to those activities, and the controls that can mitigate those threats.
Explain the key decisions and information needs for accurate cost accounting, threats to those activities, and the controls that can mitigate those threats.
Copyright © 2018 Pearson Education, Inc.
Chapter 14: The Production Cycle
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Production Cycle Process (1 of 2)
Product Design
Source documents: bill of materials and operations list
Planning and Scheduling
Source documents: Master production schedule, production order, and materials requisition
Production Operations
Cost Accounting
Copyright © 2018 Pearson Education, Inc.
Chapter 14: The Production Cycle
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Production Cycle Process (2 of 2)
Copyright © 2018 Pearson Education, Inc.
Chapter 14: The Production Cycle
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General Issues
Threats
Controls
Inaccurate/Invalid master data
Unauthorized disclosure of sensitive information
Loss or destruction of data
1 a. Data processing integrity controls
b. Restrict access to master data
c. Review changes to master data
2 a. Access controls
b. Encryption
3 a. Backup and disaster recovery procedures
Copyright © 2018 Pearson Education, Inc.
Chapter 14: The Production Cycle
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Product Design
Create a product that meets customer requirements
Generates two output documents:
Bill of materials
Operations list
Copyright © 2018 Pearson Education, Inc.
Chapter 14: The Production Cycle
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Planning and Scheduling
Two types of production planning
Manufacturing resource planning (MRP-II)
Lean manufacturing
Documents from Planning and Scheduling
Production order
Materials requisition
Move tickets
Copyright © 2018 Pearson Education, Inc.
Chapter 14: The Production Cycle
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1. Product Design 2. Planning and Scheduling
Threats
Controls
Poor product design resulting in excess costs
Over and under production
1 a. Analysis of costs arising from product design choices
b. Analysis of warranty and repair costs
2 a. Production planning systems
b. Review and approve production orders and schedules
c. Restrict access to orders and schedules
Copyright © 2018 Pearson Education, Inc.
Chapter 14: The Production Cycle
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3. Production Operations
Threats
Controls
Inventory theft
Fixed asset theft
Poor performance
Suboptimal investments in fixed assets
Loss of inventory or fixed assets due to fire or disasters
Disruption of operations
1 a. Restrict physical access
b. Document movement of inventory
c. Segregation of custody duties
from authorization and recording
2 a. Restrict access to fixed assets
b. Keep detailed records of fixed assets including disposals
3 a. Performance reporting
4 a. Solicit competitive bids
5 a. Insurance and physical safeguards
6 a. Backup and disaster recovery plans
Copyright © 2018 Pearson Education, Inc.
Chapter 14: The Production Cycle
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Cost Accounting Systems
Provide information for planning, controlling, and evaluating the performance of production operations
Provide accurate cost data about products for use in pricing and product mix decisions
Collect and process the information used to calculate the inventory and cost of goods sold values that appear in organization’s financials
Copyright © 2018 Pearson Education, Inc.
Chapter 14: The Production Cycle
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4. Cost Accounting
Threats
Controls
Inaccurate cost data
Inappropriate allocation of overhead costs
Misleading reports
1 a. Source data automation
b. Data processing integrity controls
2 a. Time-driven activity-based costing
3 a. Performance metrics
Copyright © 2018 Pearson Education, Inc.
Chapter 14: The Production Cycle
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Key Terms
Production cycle
Bill of materials
Operations list
Manufacturing resource planning (MRP-II)
Lean manufacturing
Master production schedule (MPS)
Production order
Materials requisition
Move ticket
Computer-integrated manufacturing (CIM)
Request for proposal (RFP)
Job-order costing
Process costing
Job-time ticket
Manufacturing overhead
Activity-based costing
Cost driver
Throughput
Copyright © 2018 Pearson Education, Inc.
Chapter 14: The Production Cycle
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Copyright © 2018 Pearson Education, Inc.
Chapter 14: The Production Cycle
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