Chapter 12

Authorizes movement of the needed materials from the storeroom to the factory floor.
This document indicates:
Production order number
Date of issue
Part numbers and quantities of raw materials needed (based on data in bill of materials)

Authorizes production of a specified quantity of a product. It lists:
Operations to be performed
Quantity to be produced
Location for delivery
Also collects data about these activities,

Specifies how much of each product is to be produced during the period and when.
Uses information about customer orders, sales forecasts, and finished goods inventory levels to determine production levels.
Although plans can be modified, production plans must be frozen a few weeks in advance to provide time to procure needed materials and labor.
Scheduling becomes significantly more complex as the number of factories increases.
Raw materials needs are determined by exploding the bill of materials to determine amount needed for current production. These amounts are compared to available levels to determine amounts to be purchased.

Documents the transfer of parts and materials throughout the factory.

The use of various forms of IT, such as robots and computer-controlled machinery is called

System first checks inventory on hand for sufficiency.
Calculates labor needs and determines whether overtime or temporary help will be needed.
Based on bill of materials, determines what components need to be ordered.
Necessary purchase orders are sent via EDI.
The master production schedule is adjusted to include the new order

Assigns costs to a specific production batch or job.
Used when the product or service consists of discretely identifiable items.
Example: Houses.

Assigns costs to each process or work center in the production cycle.
Calculates the average cost for all units produced.
Used when similar goods or services are produced in mass quantities and discrete units can’t be easily identified.
Example: Paint.

ID number
Serial number
Location
Cost
Acquisition date
Vendor info
Expected life
Expected salvage value
Depreciation method
Accumulated depreciation
Improvements
Maintenance performed

Includes costs that can’t be easily traced to jobs or processes, such as utilities, depreciation, supervisory salaries.
Most of these costs are collected in the expenditure cycle.
An exception is supervisory salaries, which are collected in the HRM/payroll cycle.