Page 367 - Accounting Information Systems

338 PART II Transaction Cycles and Business Processes

PROBLEM 4: INTERNAL CONTROL

Production
Planning Work Centers Inventory Control Cost Accounting System

Prepare
Work Order
Prepare
Journal General Ledger
Voucher
Materials
Update Inventory
Move Ticket Records
Job Ticket
Material
Requisitions
Excess Labor
Material Variance
Material Materials
Returns Variance
Manufacturing
Work Order Overhead
Variance

Mgmt Reports

that claim to be world-class manufacturing companies 6. ZERO DEFECTS PROCESS
and state the innovation(s) these companies have under-
Playthings, a toy manufacturer specializing in toys
taken to become world-class.
for toddlers, is considering switching to a JIT manu-
facturing process. The CEO has been talking with the
4. INTERNAL CONTROL production consultants, who tell her that a new philos-
Examine the flowchart for Problem 4 and determine ophy must be embraced: If a defective part of an out-
any control threats. Specifically discuss the control of-control process is detected, no more units should be
problems, the possible dangers, and any corrective pro- made until the process is corrected. The consultants
cedures you would recommend. estimate that the production process may occasionally
be shut down anywhere from 30 minutes to 7 hours.
Discuss the advantages and disadvantages of such a
5. DESIGN AND DOCUMENT
system.
MANUFACTURING PROCESSES
Design and document with a system flowchart a com-
puter-based manufacturing process that possesses the 7. ACTIVITY DRIVERS
information flows of the manual systems depicted in Cut It Up, Inc., is a manufacturer of wooden cutting
Figures 7-9 and 7-13. Assume that the manufacturing boards that are sold through a chain of kitchen stores.
process is triggered by a monthly sales forecast, which For years, the company has allocated overhead based
it receives periodically from the marketing department on total machine hours. A recent assessment of over-
in digital form. Further assume that all functional areas head costs has shown that these costs are now in excess
(work centers, storekeeping, inventory control, and so of 40 percent of the company’s total costs. As an
on) employ terminals that are networked to a centralized attempt to better control overhead, Cut It Up is adopting
data processing function. Your system design should an activity-based costing system. Each cutting board
minimize hard-copy documents. goes through the following processes: