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188 CHAPTER 6 The Production Process

manufacturing and therefore are not discussed in this chapter. There are many
other types of task lists. We will discuss some of them in later chapters in the
context of other processes. Others are beyond the scope of this book. Finally,
standard value keys are used to assign standard or planned values for the
normal time elements—that is, the activities that consume time—associated
with the work center. Typical time elements are setup time, processing time
(machine and labor), and teardown time. The keys utilize specifi c formulas to
calculate how much time must be allotted for each of these elements.
Work center data also include default values for operations performed
at the work center. Examples of default values are control keys and wage
data. Control keys specify how an operation or a suboperation is scheduled,
how costs will be calculated, and how operations will be confi rmed once they
are completed in the work center. For example, a control key can indicate
that confi rmation of an operation is required and must be printed before the
next operation can be performed. Wage data are associated with processes in
human capital management, such as payroll.
Available capacity defi nes how much work can be performed at the
work center during a specifi ed time. A work center can include more than one
resource or capacity, such as labor and machine. In this case, the scheduling
basis determines the specifi c capacity to be utilized for production.
A work center is associated with a cost center. Recall from Chapter 3 that
a cost center is a container or bucket that accumulates costs that are then allo-
cated or further processed by management accounting processes. Costs associ-
ated with operations completed in a work center are calculated using formulas
that utilize the costs and the standard values associated with each activity type
(e.g., setup, labor, and machine).
GBI has three work centers, as illustrated in Figure 6-7 and Figure 6-8.
Figure 6-7 shows the layout of the production facility in Dallas. It identifi es the
three work centers (ASSY1000, INSP1000, and PACK1000) and the four storage
locations (RM00, FG00, SF00, and MI00). All three work centers are associ-
ated with one cost center, the production cost center (NAPR1000).
Figure 6-8 provides details of the three work centers. ASSY1000 is
the assembly work center. It has 8 hours of labor capacity. Labor is used to
complete three operations—stage or prepare materials, construct the wheel
assembly, and assemble the fi nished bike. INSP1000 is the inspection work
center. Here the bike is placed on a machine that tests its suspension and bal-
ance. Meanwhile, the employee visually inspects the entire bike, checking for
defects. In contrast to the assembly work center, then, the inspection work
center utilizes both labor and machine capacity. Once testing has been com-
pleted, the bike is disassembled into the frame assembly and the wheel assem-
blies. These components are then packed separately in the fi nal work center
(PACK1000), which, like assembly, involves only labor. The fi nal assembly is
typically completed at the retailer’s location or by the customer after he or she
purchases the bike.

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