Tutorial 5 Production Flashcards
What is it
Materials and parts are converted into finished products with the help of machines and labour
Main focus ? What do you need to fulfil that purpose ?
Controlling production costs
You need:
Reliable standards
Reliable recording of actual hours of labour,machine time and material usage
Comparison of standard with reality
Two types of production ?
Mass production - production to stock
Purchases then production then sales
Stocks between processes, sales process is standard (eg toy factory)
Job production - production according to specific customer request
Customer need determined in sale process
Sales process used to understand needs of customers (eg ship yard)
Typical information needs
Production costs per department
Waste rate
Defect rate
Efficiency variances for materials
Capacity rates for labour and machines
Malfunction of machines
Sickness or personnel
Steps of production process
Setting standards
Planning and scheduling
Giving production orders
Production operations
Checking quality
Completion
Variance analysis
Setting standards
Design of product results in
A) bill of materials list, showing which parts are needed in what QTS for the production of one unit
B) operations list- which activities in which order, how much time can be spent by which officer with which tool/ device
C) using rate for materials,labour and machines, a standard cost price can be calculated (in case of mass production)
Risks :
Incorrect determination of rates
Incorrectness in the bill of materials
Making an incorrect pre calculation
Planning and scheduling
Carried out by planning office
Long term planning of production process aspects: location, investments in resources and maintenance must be considered
Short term planing : level of units to be made in coming period is determined. Planning based on development of QTY or strict of finished products and expected sales
Risk :
Not being authorised to do the planning
Incorrect and incomplete recording of planned production orders
Giving production orders
Planning office with support of Specific IT applications
Production manager can use planning board, where detailed info can be found for each employee and machine regarding the planned work to be done by said employee/ machine
Risk :
Not being authorised to issue work,materials and tools
Incorrect and incomplete recording for the issue of work orders in the production order file
Production operations
Execution of various work assignments, time spent and materials used, waste and rejects
Recorded by production staff in the production system
Risks:
Incorrect and incomplete recording of hours worked per assignment
Inaccurate and incomplete recording of materials consumed per assignment
Inaccurate and incomplete recording of machine hours per job
Quality control
Independent quality control department compares the :
actual quality of the finished products with the quality standards
Risks :
Use of incorrect quality standards
Completion
In case of mass production, warehouse manager will receive the finished goods after the quality control has been carried out
Warehouse manager records the following data in the inventory file
Product code
Amount
Production order number
Date
Risks :
Incorrect and incomplete recording of the finished production
Variance analysis
Accounting department
Collects actual usage of materials, actual labour and machine hours
Calculate costs allowed:
Actual units of finished products x standard costs
Actual costs - costs allowed = variances
Risks :
Incorrect Use of the standard used
Use of a wrong method
Preventive controls
Budgets, standards and rates :
-number to produce x standard cost price
Segregation of duties :
-planning office (internal authorisation ), production (execution), accounting department (checking and recording)
Procedures and Guidelines:
- for changing standards, for planning, for recording actual usages and costs, for quality control
Detective controls
Analytical reviews :
- actual production costs v budget v previous period
- actual waste and actual rejection c expectations
Reconciliations :
-starting inventory of raw materials + purchased raw materials - ending inventory of raw materials = actual amount of raw mats used according to production report
-look in tutorial slides for others
Detailed checks :
- accuracy of rages and standards used
- accuracy of the recording of labour hours on production orders and so on
