AIS+ch12 - CHAPTER 12 The Production Cycle 1 LECTURE...

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CHAPTER 12 The Production Cycle 1
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LECTURE OUTLINE Production cycle Basic business activities and data processing operations. Decisions needed to be made. Information needed to make these decisions. Major threats. Controls related to those threats.
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PRODUCTION CYCLE A recurring set of business activities and related data processing operations associated with the manufacture of products. Decisions that must be made include: What mix of products should be produced? How should products be priced? How should resources be allocated? How should costs be managed and performance evaluated?
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PRODUCTION CYCLE Information flows to the production cycle from other cycles: The revenue cycle provides information on customer orders and sales forecasts for use in planning production and inventory levels. The expenditure cycle provides information about raw materials acquisitions and overhead costs. The human resources/payroll cycle provides information about labor costs and availability. Information also flows from the production cycle: The revenue cycle receives information from the production cycle about finished goods available for sale. The expenditure cycle receives information about raw materials needs. The human resources/payroll cycle receives information about labor needs. The general ledger and reporting system receives information about cost of goods manufactured.
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PRODUCTION CYCLE 4 basic activities: 1. Product design 2. Planning and scheduling 3. Production operations 4. Cost accounting Accountants are primarily involved in the fourth activity (cost accounting) but must understand the other processes well enough to design an AIS that provides needed information and supports these activities.
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1. PRODUCT DESIGN Objective: Design a product that strikes the optimal balance of: Meeting customer requirements for quality, durability, and functionality. Minimizing production costs. Simulation software can improve the efficiency and effectiveness of product design. Key documents and forms: Bill of Materials: Lists the components that are required to build each product, including part numbers, descriptions, and quantity. Operations List : Lists the sequence of steps required to produce each product, including the equipment needed and the amount of time required.
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2. PLANNING AND SCHEDULING Objective: Develop a production plan that is efficient enough to meet existing orders and anticipated shorter- term demand while minimizing inventories of both
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This note was uploaded on 12/21/2010 for the course ACCT 330 taught by Professor Heidi during the Fall '09 term at Hong Kong Shue Yan.

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AIS+ch12 - CHAPTER 12 The Production Cycle 1 LECTURE...

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