Reference no: EM132793937
Question - CONVERSION CYCLE - Moore Style Company is a manufacturer of fabrics and textiles. The company is reviewing the advantages of activity-based costing, the benefits to initiate automated production and the prospect of becoming a world class company. The following describe parts of the Company's production cycle procedures.
The process begins with the storekeeping clerk, Dean Nelson controlling the inventory and maintains the inventory records for both raw materials and finished goods in the storekeeping department. He checks on the inventory control files daily and assesses the store room to check on the raw materials required for the production process. He then sends the inventory status report to the production, planning and control department.
John Smith is the manager in the production, planning and control department. Upon receiving the inventory status report and the sales forecasts report from the marketing department, he takes a copy of the bill of materials, route sheet and begins to assess the inventory requirements. If inventory materials are adequate, John prepares a production schedule, work order and move tickets which he sends to the work centers. If inventory needs to be ordered, John would then prepare two copies of material requisition document and send it to the purchasing department and another copy to the storekeeping departments.
When Dean Nelson receives the material requisition, he releases the raw materials to the work centers. He then files a copy of the materials requisition, updates the inventory records, creates a journal voucher and send to the cost accounting department.
John Smith also heads the various work centers. All supervisors of the work centers report to him. These supervisors, upon receipts of the above documents, initiate the production process.
Required -
a. Prepare document flowchart of Moore Style Company.
b. Discuss FOUR (4) weaknesses in the existing system and recommend FOUR (4) relevant controls to improve the current procedures. Your answers should be written in the following format.