Flowchart Production Cycle Essay
Using a context diagram, the Production Cycle was shown as being linked to the Revenue Cycle by receiving customer orders and sales forecasts from the Revenue Cycle, and sending finished goods to the revenue cycle. It is linked to the Expenditure Cycle by sending purchase requisitions to order raw materials to the Expenditure Cycle, and the Expenditure Cycle then allocates overhead and raw materials costs to the …show more content…
Whatever the starting point, the first step would be to see if there are enough raw materials (upper left hand of flowchart). If there are enough raw materials, then create a raw material inventory status report. If there is not enough, then you would create a purchase order to buy them. The materials are then ordered by requisition through the expenditure cycle, which generates a purchase order that is sent to the vendor. The vendor ships the order, accompanied by a vendor invoice, and it is received by the receiving department, which makes out a receiving report detailing the type, quantity, and quality of goods received. It is compared with the purchase order, and any discrepancies are ironed out with the supplier, such as insufficient quantities, damaged goods, or suspect quality (usually by credit memo). Bar-coding and radio frequency tags can increase efficiency in establishing correct quantities. Signing the receiving report can be done at the receiving station through terminals that have access controls and require an electronic signature.
Once it has been decided to accept shipment of the goods, they are then transferred from receiving to inventory, with the goods being entered into the raw materials