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Process 201

Figure 6-21: Structure of a production order

partially confi rmed (PCNF), confi rmed (CNF), partially delivered
(PDLV), and delivered (DLV).
• A production order includes the specifi c operations needed to pro-
duce the material, along with data on the designated work centers.
It also identifi es the specifi c sequences for the operations. Note that
a production order must include at least one operation.
• Capacity splits are used to determine how the work to be per-
formed is distributed or “split” among the machines and/or people
involved in producing the material.
• The production order identifi es the components needed to produce
the specifi ed quantity of the material. Typically, the components are
obtained from the BOM. However, they can be added or adjusted
manually, as needed.
• The PRTs to complete one or more operations are identifi ed.
• As the name suggests, trigger points initiate or “trigger” some activ-
ity or function. An example of a trigger point is the completion of
a specifi ed operation. When this occurs, subsequent operations in
the routing are released for execution, or some activity in another
process is triggered.
• A production order includes preliminary estimates for various cost
components, such as material and overhead. These costs are asso-
ciated with the appropriate accounts in the general ledger, such
as material consumption accounts. As production is executed, the
actual costs are also included as data in the production order along
with the preliminary cost estimates. These data are used in product
costing, which is a process in management accounting.

• After the production order has been completed, the costs accumulated
in the production order must be settled. During settlement the actual
costs incurred are allocated to cost objects based on specifi ed settle-
ment rules. We discuss settlement in more detail later in this chapter.

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