I read an article on how the production cycle and a company's AIS are closely related, and
how much the AIS's effectiveness today affects how successfully the production cycle
runs. The manufacturing of items involves a recurrent series of business activities and
related data processing procedures known as the production cycle (Romney). The
production cycle is divided into four primary sections: cost accounting, production
operations, production programming, and production design (Ramazani). The success of
the production cycle is greatly influenced by a company's AIS, as the prompt suggests.
Overall, AIS contributes significantly to the production design phase, but production
operations account for 65–80% of the expenses. The goal of the production programming
phase is to create a production method that is capable of handling incoming orders and the
production requirements of various circumstances. A business with a powerful AIS can
use it to complete the manufacturing programmed phase while simultaneously monitoring
and controlling costs. Production costs and operations need to be taken into account and
managed inside the AIS. Cost accounting, the last step, is equally important. In order to
determine costs, the AIS must be able to: a) provide data for production planning, control,
and evaluation; b) provide data for end cost of goods for use in pricing and product
blending decisions; and c) provide data for calculating end cost of goods finished and cost
of goods sold (Ramazani) (Romney). Companies with production processes in place that
are incompatible with their AIS exhibit severe shortcomings in their capacity to provide
managers and users with accurate, reliable, and timely information for decision-making
(Ramazani). A manufacturing organization must integrate an efficient AIS into their
production cycle if they hope to succeed in the competitive business environment of today.
References:
Ramazani, M., Allahyari, A., Askari, R & Zanjani, F. (2020). Management Science
Letters: Compatibility of accounting information systems (AISs) with activities in
production cycle, 3(1). Retrieved from
http://www.growingscience.com/msl/Vol3/msl_2019_301.pdf
Romney, M. B., Steinbart, P. J., Summers, S. L., & Wood, D. A., (2020). Accounting
Information Systems (15th ed.)
