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Major Information Flows in the Production Cycle This is a system flowchart of the Production Cycle. It is where the goods are being produced. Notice that the cycle consists of 3 inventory divisions: Raw Materials, Work-in-Process, and Finished Goods. All the files in the cycle are master files. These files: 1) Raw Materials, 2) Work-in-Process, and 3) Finished Goods, are shown on the Balance Sheet in the Financial Statements, and show how fast things are selling. This flowchart shows the positioning of the Production Business Process (inside the box) as it interfaces with the Revenue (Sales/Collections) Business Process, the Purchasing (Acquisitions/Payment) Process, and the Planning/Control Process. Reading from the flowchart, we start with the Sales Order, which is where the demand for the product begins. The information on the Sales Order is transferred into a Production Order that is input into the online process of Production Management. The Production Management uses the production order to authorize and begin the production process. You can see the production process interfacing with work in process inventory. From the Purchasing Cycle, the Receiving document consists of direct and indirect materials that will be input into the Raw Material inventory file. The Time card or Labor ticket consists of direct and indirect labor costs that are input into the Cost Accounting process and the Work in Process inventory file. An example of indirect costs may be overhead. The Raw Material inventory file is a master file that is being read by the Raw material inventory Management Process. It is being read to see if materials are needed or not for the production. If materials are needed, then a Purchase Order is made. A status report document also comes out from the Raw material inventory file. The Cost Standard document is from the Planning and Control Cycle. It is being input into the Standard Cost file. Standard Costs may be a wide range of things, such as, dimensions or how much materials should cost. The Standard Cost file is used in the Cost Accounting process. So is the Raw Materials inventory file. This is where all the calculations take place. And what comes out of the Cost Accounting process is the Cost Activity or Standard Cost Variance report. Output from the Cost Accounting process is entered into the Work-in-Process inventory file. What comes out of the file is a Work-in-Process status report document. Work in Process is input into the Completion of Production process. As a result, a Finished Goods inventory file is produced from the Completion of Production process. If there are any problems, production proceeds to the Finished Goods Inventory Management Process. The problems are sent to the production process all over again. If there are no problems, the item is entered into the Cost of Goods Sold file when sold to the customer. A Finished Goods status report comes out from the Finished Goods inventory file.