Kế toán kiểm toán - Chapter 13: The production cycle

Accounting Information Systems9th EditionMarshall B. Romney Paul John Steinbart13-1©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartThe Production CycleChapter 1313-2©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartLearning ObjectivesDescribe the major business activities and related data processing operations performed in the production cycle.Explain how a company’s cost accounting system can help it achieve its manufacturing goals.Identify major threats in the production cycle, and evaluate the adequacy of various control procedures for dealing with those threats.3©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartLearning ObjectivesDiscuss the key decisions that must be made in the production cycle, and identify the information needed to make those decisions.Read and understand an REA data model of the production cycle.Develop an REA data model for the production cycle.4©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartIntroductionLeRoy Williams, VP of manufacturing for Alpha Omega Electronics (AOE), is concerned about problems associated with AOE’s cost accounting system.Elizabeth Venko, AOE’s controller, and Ann Brandt, AOE’s vice president of information systems, agreed to undertake a study of how to modify the system.5©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartIntroductionThis chapter is organized around the three major functions of the AIS in the production cycle.The description of production cycle activities and cost accountingIntroduction of major control objectives in the production cycleShowing how the AIS can store and organize information needs6©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartLearning Objective 1 Describe the major business activities and related data processing operations performed in the production cycle.7©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartProduction Cycle ActivitiesThe production cycle is a recurring set of business activities and related data processing operations associated with the manufacturing of products. The production cycle is a recurring set of business activities and related data processing operations associated with the manufacturing of products.8©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartProduction Cycle ActivitiesAccurate and timely cost accounting information is essential input to decisions about:Product mix Product pricingResource allocation and planning Cost management9©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartProduction Cycle ActivitiesThere are four basic activities in the production cycle:Product designPlanning and schedulingProduction operationsCost accounting10©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartProduct Design (Activity 1)The first step in the production cycle is product design.The objective of this activity is to design a product that meets customer requirements for quality, durability, and functionality while simultaneously minimizing production costs.11©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartProduct Design (Activity 1)Documents and procedures:The product design activity creates two main documents:Bill of materialsOperations list12©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartProduct Design (Activity 1)How can accountants be involved in product design?by showing how various design trade-offs affect production costs and thereby profitabilityby ensuring that the AIS is designed to collect and provide information about the machine setup and materials handling costs associated with alternative product designsby providing data about repair and warranty costs associated with existing products13©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartPlanning and Scheduling (Activity 2)The second step in the production cycle is planning and scheduling. The objective of this step is a production plan efficient enough to meet existing orders and anticipate short-term demand without creating excess finished goods inventories.14©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartPlanning and Scheduling (Activity 2)What are two common methods of production planning?Manufacturing resource planning (MRP-II)Just-in-time (JIT) manufacturing systemsMRP-II is an extension of materials resource planning that seeks to match existing production capacity and raw materials needs with forecasted sales demands.The goal of JIT is to minimize inventories of raw materials, work in process, and finished goods.15©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartPlanning and Scheduling (Activity 2)Documents, forms and procedures:The master production schedule (MPS) specifies how much of each product is to be produced during the planning period and when that production should occur.A materials requisition authorizes removal of materials from the storeroom to the factory.Subsequent transfers of these materials are documented on move tickets.16©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartPlanning and Scheduling (Activity 2)How can accountants be involved in planning and scheduling?by ensuring that the AIS collects and reports costs in a manner consistent with the production planning techniques used by the companyby helping to choose whether MRP-II or JIT is more appropriate17©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartProduction Operations (Activity 3)The third step in the production cycle is the actual manufacture of products.The manner in which this activity is accomplished varies greatly across companies.What is computer-integrated manufacturing (CIM)?It is the use of information technology in the production process.18©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartProduction Operations (Activity 3)Computer-Integrated Manufacturing (CIM) is the use of various forms of IT in the production process, such as robots and computer-controlled machinery, to reduce production costs.Every firm needs to collect data about the following four facets of its production operations:Raw materials usedLabor-hours expendedMachine operations performedOther manufacturing overhead costs incurred19©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartLearning Objective 2 Explain how a company’s cost accounting system can help it achieve its manufacturing goals20©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartCost Accounting (Activity 4)The final step in the production cycle is cost accounting.What are the three principal objectives of the cost accounting system?To provide information for planning, controlling, and evaluating the performance of production operationsTo provide accurate cost data about products for use in pricing and product mix decisionsTo collect and process the information used to calculate the inventory and cost of goods sold values21©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartCost Accounting (Activity 4)What are two types of cost accounting systems?Job-order costingProcess costingJob-order costing assigns costs to specific production batches or to individual jobs.Process costing assigns costs to each process, and then calculates the average cost for all units produced.22©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartCost Accounting (Activity 4)The choice of job-order or process costing affects only the method used to assign costs to products, not the method used for data collection.Raw Materials:When production is initiated, the issuance of a materials requisition triggers the journal entry.23©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartCost Accounting (Activity 4)Assume that $15,000 of raw materials were issued.What is the journal entry? Work in Process 15,000 Raw Materials Inventory 15,000 To record issuance of raw materialsAssume that $1,000 of raw materials were returned to inventory.24©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartCost Accounting (Activity 4)What is the journal entry? Raw Materials Inventory 1,000 Work in Process 1,000 To record return of raw materials to inventoryMost raw materials are bar-coded.Inventory clerks use online terminals to enter usage data for those items that are not bar-coded.25©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartCost Accounting (Activity 4)Direct Labor:A job-time ticket is a paper document used to collect data about labor activity.This document records the amount of time a worker spent on each specific job task.Workers can enter this data using online terminals at each factory workstation.26©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartCost Accounting (Activity 4)Machinery and Equipment: As companies implement CIM to automate the production process, an even larger proportion of product cost relate to the machinery and equipment used to make the product.27©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartCost Accounting (Activity 4)Manufacturing Overhead:What is manufacturing overhead?all manufacturing costs that are not economically feasible to trace directly to specific jobs or processes28©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartCost Accounting (Activity 4)Accounting for Fixed Assets:The AIS also needs to collect and process information about investment in the property, plant, and equipment used in the production cycle.Fixed assets should be bar-coded.29©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartCost Accounting (Activity 4)identification numberserial numberlocationcostdate of acquisitionvendor name and addressexpected lifeexpected salvage valuedepreciation methoddepreciation charges to dateimprovementsmaintenance services performedWhat minimum information should organizations keep about their fixed assets?30©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartLearning Objective 3 Identify major threats in the production cycle, and evaluate the adequacy of various control procedures for dealing with them.31©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartControl: Objectives,Threats, and ProceduresThe second function of a well-designed AIS is to provide adequate controls to ensure that the following objectives are met:All production and fixed asset acquisitions are properly authorized.Work-in-process inventories and fixed assets are safeguarded.All valid, authorized production cycle transactions are recorded.32©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartControl: Objectives,Threats, and ProceduresAll production cycle transactions are recorded accurately.Accurate records are maintained and protected from loss.Production cycle activities are performed efficiently and effectively.33©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartControl: Objectives,Threats, and ProceduresWhat are some threats?unauthorized transactiontheft or destruction of inventories and fixed assetsrecording and posting errorsloss of datainefficiencies and quality control problems34©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartControl: Objectives,Threats, and ProceduresWhat are some control procedures?accurate sales forecasts and inventory recordsauthorization of productionrestricted access to production planning program and to blank production order documentsreview and approval of capital asset expenditures35©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartControl: Objectives,Threats, and Proceduresdocumentation of all internal movements of inventoryproper segregation of dutiessource data automationonline data entry edit controlsbackup and disaster recovery proceduresregular performance reportscost of quality control measurement36©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartLearning Objective 4 Discuss the key decisions that must be made in the production cycle, and identify the information required to make those decisions.37©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartInformation Needs and ProceduresThe third function of the AIS is to provide information useful for decision making.In the production cycle, cost information is needed by internal and external users.Traditionally, most cost accounting systems have been designed primarily to meet financial reporting requirements.38©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartInformation Needs and ProceduresWhat are two major criticisms of traditional cost accounting systems?Inappropriate allocation of overhead costsInaccurate performance measures 39©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartInformation Needs and ProceduresWhat is a potential solution to the first criticism?Activity-Based Costing (ABC):ABC attempts to trace costs to the activities that create them and only subsequently allocates those costs to products or departments.40©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartInformation Needs and ProceduresABC systems distinguish three separate categories of overhead.Batch-related overheadProduct-related overheadCompany-wide overheadThe bases used to allocate manufacturing overhead are the cost drivers.What is a cost driver?anything that has a cause-and-effect relationship on costs41©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartInformation Needs and ProceduresWhat are some benefits of ABC?better decisionsimproved cost managementMore accurate cost data results in better product mix and pricing decisions.More detailed cost data improves management’s ability to control and manage total costs.42©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartInformation Needs and ProceduresWhat is the potential solution to the second criticism?Integrated production cycle data model43©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartLearning Objective 5 Read and understand a data model (REA diagram) of the production cycle.44©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartProduction Cycle Data ModelTo maximize its usefulness for cost management and decision making, production cycle data must be collected at the lowest possible level of aggregation.The following diagram presents relationships between the work in process (resource entity) and raw materials, labor, and machine operations (event entities) used to produce a batch of goods.45©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartProduction Cycle Data ModelPartial REA Diagram of the Production CycleRaw materialsissuanceWork inprocess(1, N)(1, 1)(1, N)Job operationsMachineoperations(1, 1)(1, N)(1, 1)46©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartLearning Objective 6 Develop an REA data model for the production cycle.47©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartProduction CycleProductioncycleExpenditurecycleRevenuecycleSales forecastFinished goodsCustomer ordersOverheadRaw materialsPurchase Requisitions48©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartProduction CycleProductioncycleHuman resourcepayroll cycleGeneral ledgerandreporting systemManagementReportsLabor needsLabor costsCost of goods manufactured49©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartProduction CyclePlanning andschedulingProductdesignProductionoperationsCostaccountingFinished goodsWIPBill of materialsOperations listCostsTickets and requisitionsOrders,tickets andrequisitions50©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartProduction Cycle Data ModelWhat are the relationships among work in process and the three event entities?all are one-to-many What do they reflect?Each production run may involve a number of raw materials issuances, labor operations, and machine operations.Each of those activities, however, is linked to a specific production run.51©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartProduction Cycle Data ModelPartial REA Diagram of the Production CycleEmployeesSupervisor(1, N)(1, 1)52©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartProduction Cycle Data ModelWhat is the relationship between the two agent entities?many-to-oneWhat does it reflect?Each employee is assigned to a specific supervisor.Each supervisor is responsible for many employees.53©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartCase ConclusionWhat did Elizabeth Venko decide?Implement activity-based costingChange the reports producedShe decided that two major changes were needed in the reports produced by the AIS:Quality control costs will be reported.Nonfinancial as well as financial measures will be included in the performance reports.54©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/SteinbartEnd of Chapter 1355©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart