WELCOME TO OUR PRESENTATION

ON
THE PRODUCTION CYCLE
 SUBMITTED TO

Md. Zulfiker Mahmud

Assistant Professor,
Department of Accounting and information systems
 Forever Ties
Serial No. Name ID.NO

01. Mir mahfujur Rahman B-140201103

02. Hasibul Alam B-140201066

03. Md. Nasir Uddin B-140201101

04. Md. Sadikur Rahman B-140201025

05. Mobarak B-140201088

06. Robi Hossain B-140201078

Topics are covered:
 Production Cycle
 Production Cycle information systems

 Product Design

 Planning and Scheduling

 Production Operation and

 Cost Accounting
 The Production Cycle
Introduction:
The production cycle is a recurring set of business activities and
related information
processing operations associated with the manufacturer of products.

Figure 14.1 shows how the production cycle is linked to the other
subsystems
in a company’s information systems.
.Production Cycle Information System:

Figure 14-2 present the position of the enterprise resource planning (ERP) that supports an
organization’s production cycle.
 Threats and Controls:

Activity Threat Controls

General issues 1. Inaccurate or invalid mater 1. Data processing integrity controls.

throughout data. 2. Access controls.
entire 2. Unauthorized disclosure of 3. Backup and disaster recovery procedures.
production sensitive information.
cycle 3. Loss or destruction of data.

Product design 4. Poor product design resulting 4. Accounting analysis of costs arising from product
in excess costs. design choices.

Planning and 5. Over and under prediction 5. Review and approval of production schedules and
scheduling orders.
Production operations 6. Theft of inventory. 6. Physical control.
7. Theft of fixed assets. 7. Maintaining detailed records of fixed assets,
8. poor performance. including disposal.
9. Disruption of operations. 8. Performance reports.
9. Backup and disaster recovery plans.

Cost accounting 10. Inaccurate cost data. 10. Data processing integrity controls.
11. Misleading reports. 11. Innovative performance metrics.
 Product Design

The first step in production cycle is product design.

Process
The product design activity creates two outputs:

1.Bill of materials
2.Operations list
Product Life-cycle Management (PLM) software consists of three
components:

1.Computer-aided design (CAD) software

2.Digital manufacturing software
3.Product data management software

Threads and Controls

Poor product design drives up costs.

 Planning and Scheduling

The objective of the planning and scheduling activity is to:

• develop a production plan that is efficient enough to meet

existing orders and

• anticipated shorter-term demand while minimizing inventories

of both raw materials and finished goods.
 Production Planning Methods:

There are two common approaches to production planning are;

1.Manufacturing Resource Planning (MRP-II)

2.Lean Manufacturing
 Key documents and forms:

1.Master production schedule

2.Production order

3.Materials requisition

4. Move tickets
THREATS AND CONTROLS ON PLANNING AND
SCHEDULING

THREATS:

The primary threat in the planning and scheduling activities are;

• Over production

• Under production
 Control :

Production planning systems can reduce the risk of the over – and under
production .

 More accurate production planning, including accurate and current :

Sales forecast
Inventory data

Investment in production planning.

Regular collection of data on production performance to adjust production

schedule

Proper authorization of production orders .

 Validity checks on production orders

 Production Operations

•Production operations vary greatly across companies, depending on

the type of product and the degree of automation.

•The use of various forms of IT, such as robots and computer-

controlled machinery is called computer-integrated
manufacturing (CIM).

Can significantly reduce production costs.

•Accountants aren’t experts on CIM, but they must understand how it

affects the AIS.

One effect is a shift from mass production to custom-order

manufacturing and the need to accumulate costs accordingly.
Production Operations Threats and Controls

•Theft of inventory

•Theft of fixed asset

•Poor performance

•Suboptimal investment in fixed assets

•Loss of inventory or fixed assets due to fire or other

disasters

•Disruption of operations
 Production Operations Controls

•Physical access control

•Documentation of all inventory movement

•Segregation of duties—custody of assets from recording and authorization

of removal

•Restriction of access to inventory master data

•Periodic physical counts of inventory and reconciliation of those counts to

recorded

quantities

•Physical inventory of all fixed assets

•Restriction of physical access to fixed assets

 Cost Accounting
The final step in the production cycle is cost accounting.
The three principal objectives of the cost accounting system are as follows

To provide information for planning, controlling, and evaluating the

performance of production operations

To provide accurate cost data about products for use in pricing and
product mix decisions

To collect and process the information used to calculate the inventory and
cost of goods sold values
Types of cost accounting systems are
1) Job-order costing:

Job-order costing assigns costs to specific production batches or to

individual jobs

2) Process costing:

Process costing assigns costs to each process, and then calculates the
average cost for all units produced.

3) Activity-Based costing:

It attempts to trace costs to the activities that create them. It can refine
and improve cost allocation under both Job-order & Process costing
systems.
 The choice of method:
1) Does not affect how data are collected.

2) Does affect how cost are assigned to products.

Both require that data be accumulated about;

1) Raw materials
2) Direct labor
3) Manufacturing overheads
4) Machinery and equipment usage
 Threats:
1) Inaccurate recording and processing of production activity data.

2) Loss, alteration and unauthorized disclosure of data.

3) Poor performance.

Controls:
1) Automated data collection with RFID technology, bar code, scanner and
badge reader to ensure accurate data entry.

2) All data files and key master files should be backed up regularly.

3) Prepare and review performance report.

Thank you