Thirteen: Chapter Other Business Processes
Conversion process is typically associated with manufacturing enterprises; its basic purpose is to convert direct material, direct labor, and manufacturing overhead into a finished product. Job costing is where goods are produced "to order." Units of product are differentiated; that is, you can tell the difference between them by looking at them Process costing is most closely associated with undifferentiated, mass-produced goods. Hybrid system is the combination of both job costing and process costing. In this system, a "basic unit" might be mass produced, but then customized based on a client's order. Forms Used in Manufacturing Form Name Purpose Materials Request raw material from the warehouse requisition for production Job cost sheet Summarizes the material, labor, and overhead cost in a job costing system Labor time ticket Accumulates labor data (time, pay rate, total labor cost) Production cost Summarizes cost and quantity report information in a process costing system Materials move Documents the movement of materials ticket from the warehouse into production Originator Production Production Production Production Warehouse Recipient Warehouse Accounting Accounting Accounting Production
FINANCING PROCESS
The financing process deals with transactions between an organization and its stockholders, as well as between an organization and its long-term creditors. Financing transactions: process 1. Issuance of capital stock: a. Number of shares b. Par value per share c. Market value per share d. Shareholder identification data (such as name and address) 2. Purchase of treasury shares: a. Number of shares b. Price per share c. Shareholder identification data 3. Long-term debt transactions (issuance and repayment): a. Principal b. Coupon internist rate c. Market interest rate at time of issuance d. Time to repayment
e. Number of annual interest payments f. Lender identification data 4. Dividend distributions: a. Type of dividend (cash, stock, property) b. Shareholder identification data c. Amount of dividend d. Dates d.i. Declaration d.ii. Record d.iii. Distribution A sinking fund can be used to mitigate the risk of insufficient cash to repay principal. A sinking fund is a pool of money restricted to just one purpose: debt repayment.
HUMAN RESOURCE PROCESS
The human resource process may be the most complex of all business s processes today. Hiring employees Paying them Coordinating employee benefits Evaluating their performance Managing their departures from the firm via terminations, quitting, or retirement. The risks associated with the human resource process fall into two major groups: financial and human.
PROCESS RELATIONSHIPS
Organizations typically need three kinds of resource to function effectively: people, money, and other assets ( such as supplies, inventory, and equipment.