After completing this chapter, you should be able to: List and explain the similarities and important differences between job-order and process costing, prepare journal entries to record the flow of costs in a process-costing system with sequential production departments, prepare a table of equivalent units under weighted-average process costing,. | Lecture 28: Measuring and Managing Process performance Book Reference: Management Accounting Robert S. Kaplan Introduction: In this chapter, we will discuss many issues related to how management accounting information is used to measure and manage process decisions. This chapter presents three types of facility designs: (1) process layouts, (2) product layouts, and (3) group technology—all of which can be used to help organizations reduce costs. We follow this with a discussion of how organizations can reduce costs by using a lean manufacturing approach aimed at improving the quality of their processes and reducing cycle time. FACILITY LAYOUT SYSTEMS Determining the right kind of facility layout for an operation is a critical part of managing operations. Managers must consider the entire operations process within a facility and consider the amount of space required, the demand for the product or service produced, and the number of operations that are needed. We will study three types of facility designs: process layouts, (2) Product layouts, (3) group technology. Regardless of the type of facility design, a central goal of the design process is to streamline operations and thus increase the operating income of the system. One method that can guide this process for all three designs is the theory of constraints (TOC). Theory of Constraints This theory maintains that operating income can be increased by carefully managing the bottlenecks in a process. A bottleneck is any condition that impedes or constrains the efficient flow of a process; it can be identified by determining points at which excessive amounts of work-in-process inventories are accumulating. The buildup of inventories also slows the cycle time of production. The TOC relies on the use of three measures: (1) the throughput contribution; (2) Investments (3) operating costs. Theory of Constraints The throughput contribution is the difference between revenues and direct materials for the quantity of . | Lecture 28: Measuring and Managing Process performance Book Reference: Management Accounting Robert S. Kaplan Introduction: In this chapter, we will discuss many issues related to how management accounting information is used to measure and manage process decisions. This chapter presents three types of facility designs: (1) process layouts, (2) product layouts, and (3) group technology—all of which can be used to help organizations reduce costs. We follow this with a discussion of how organizations can reduce costs by using a lean manufacturing approach aimed at improving the quality of their processes and reducing cycle time. FACILITY LAYOUT SYSTEMS Determining the right kind of facility layout for an operation is a critical part of managing operations. Managers must consider the entire operations process within a facility and consider the amount of space required, the demand for the product or service produced, and the number of operations that are needed. We will study three types
