RIZAL TECHNOLOGICAL UNIVERSITY

COLLEGE OF BUSINESS AND ENTREPRENEURIAL TECHNOLOGY

DEPARTMENT OF ACCOUNTANCY

CONVERSION CYCLE (PROCESS COST)

An Application of the Systems Development Life Cycle Principles

In Partial Fulfillment
Of the Requirements for the Course
INFOTECH 2 (Accounting Information System)

BARBACHANO, LOWELA C.
CAIRO, JANE RIZZLYN V.
MARILAO, RONALDO JR. B.
MIÑA, JELYN NICOLE I.
RABAGO, JUSTIN L.
TOBIS, RAQUEL L.

April, 2022

Page 1 of 25
 TABLE OF CONTENTS
PRELIMINARY PAGE
Title Page 1
Table of Contents 2

PHASE
I. PLANNING PHASE
A. Statement of the Objectives 3
1. General Objective 3
2. Specific Objectives 3
B. Scopes 3
1. Logical Scope 3
2. Temporal Scope 3
3. Organizational Scope 4
a. Project Team 4
b. Users of the Developed System 5
4. Financial Scope 6

II. ANALYSIS PHASE

A. Description of Inputs and Outputs or the End-user requirements 7
B. Description of Master Files and Transaction Files 9

III. DESIGN PHASE

A. Outputs and the Required Inputs 12
B. Master Files and Transaction Files 20

IV. DEVELOPMENT PHASE

A. Relevant Policies Governing the System 22
B. System Procedures 23
1. Context Diagram 23
a. Decomposed Diagram 24

Page 2 of 25
 I. PLANNING PHASE
The objectives and the scope of the project are dealt with under this phase as
discussed below.
A. Statement of the Objectives

1. General Objective
The general objective of the project is to establish an improved conversion
cycle system for manufacturing entities where costs can be reduced and business
transactions be processed on-line.
2. Specific Objectives
Specifically, the project is aimed at ensuring that:
1. Adequate raw materials and other resources needed are available for production.
2. The costs incurred for each process are accumulated accurately and fully.
B. Scope
1. Logical Scope
The project begins with the determination of the raw materials available for
use and ends with the preparation of the necessary financial reports, such as the cost
of production report and the variance report.
2. Temporal Scope
To track the progress of the project, a Gantt chart is prepared. The purpose of
the said chart is to have a visual representation of the project timeline. The chart
below depicts the amount of time spent on the project and the point at which each
task has been completed to achieve and finish the output required. The project started
on March 8, 2022 and has been finalized and finished on April 26, 2022 as shown in
the tables below.

Table 1: Timetable of the Project Team for the Planning and Analysis Phase

Page 3 of 25
 Table 2: Timetable of the Project Team for the Design and Development Phase
3. Organizational Scope
To complete the system, the project team is responsible in the planning and in
the organization of the resources meet the objectives. The people involved in the
project planning and execution, as well as their duties, are listed below.
a. Structure of the Project Team

Figure 1: Project Team Organizational Structure

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 ROLES JOB RESPONSIBILITIES
Project Manager ➢ Leads the project team in developing and approving project plans.
➢ Sets up the project schedule and assigns tasks to project members.
➢ Responsible in monitoring and reporting project tasks and status.
Business Analyst ➢ Inspects the current state of the business system including its
organizational structure and documents all business requirements.
Production Analyst ➢ Responsible in ensuring the proper and accurate accumulation of
production costs.
➢ Responsible in designing efficient production scheduling and
staffing model to optimize production costs.
Quality Assurance ➢ Responsible in the overall development of a Quality Assurance
Manager (QA) System that meets the buyer’s quality standards.
Testing Analyst ➢ Evaluates the system and ensures that all processes are tried and
tested. Analyze results and make appropriate reports.
➢ Also rates all aspects of the interaction between the end users and
the system and look for weak points to improve effectiveness and
overall satisfaction of the users.
System Analyst ➢ Responsible in analyzing the current status of the production
system and designing a system that meets the intended outcomes.

Table 3: Project Team Roles and Responsibilities

b. Structure of the end-users

Figure 2: The End-Users of the Developed System

Page 5 of 25
 4. Financial Scope
The costs that will be incurred for the completion of the project at hand as well
as the benefits from such expenses will include the following:
COSTS BENEFITS
System’s software and hardware. Ensure a safe and secured business information; only
those authorized can access the system.
Research and development costs. A secured and well-built system.
Labor cost of the project team. Well-thought conversion cycle system where
transaction could be captured on-line than a manual
system.
Two computers with customized Get exactly the features need and provide more
specifications. control and choices on the configuration.
Software licenses and installation Data and information can be retrieved more quickly
system and with greater confidence in its accuracy.
Hiring of a professional IT Increased product quality, decrease in human
personnel. processing costs, and improved productivity of
employees.
Printer Costs can be fully and accurately accumulated and
reports can be processed on-time.

Table 4: The Expected Costs and Benefits in Developing the Project

Page 6 of 25
 II. ANALYSIS PHASE
Upon the review and detailed investigation of the project, the processing
requirements, as well as the software, hardware, and network requirements for the system
to be built, have all been identified.
A. Description of Outputs and Inputs (End-user requirements)
The outputs and inputs for the system, as well as the corresponding descriptions, are
enumerated below.
Output Input
Name: Raw Materials Inventory Status Report Name: 1. Physical Inventory Count Sheet
2. Materials Requisition
Purpose: To determine the availability of raw Source:
materials that will be used during the
production and to ensure that the reorder ✓ Who Prepares?
level will be maintained so that the raw 1. Inventory Controller
materials will not go out of stock. 2. Production Supervisor

✓ Where Prepared:
1. Warehouse Department
2. Production Department
Users:
➢ Production Manager
➢ Production Control Department
Output Media: Softcopy and hardcopy Input Media: Keyboard
Frequency: Weekly

Output Input
Name: Factor Availability Report Name: Process Capacity Sheet
Purpose: To determine how much capacity is Source:
available (machinery, time and labor) and how
much the entity can produce for a shift. ✓ Who Prepares?
Production Supervisor

✓ Where Prepared:
Production Department
Users:
➢ Production Manager
➢ Production Control Department
Output Media: Softcopy and hardcopy Input Media: Keyboard
Frequency: Weekly

Page 7 of 25
 Output Input
Name: Purchase Requisition Name: Raw Materials Inventory Status Report
Purpose: To request from the purchasing Source:
department that enough materials be
ordered to be used in the production ✓ Who Prepares?
process and that the said materials are Inventory Controller
available at the time they are needed.
✓ Where Prepared:
Inventory Control Department
Users:
➢ Inventory Controller
➢ Purchasing Manager
Output Media: Softcopy and hardcopy Input Media: Keyboard
Frequency: When the reorder level has
been reached.

Output Input
Name: Cost of Production Report Name: 1. Materials Requisition
2. Timesheet
3. Move Ticket
4. Production Order
Purpose: To show summarized Source:
information about the flow of units and
costs through the work in process account ✓ Who Prepares?
of a processing department. 1. Production Staff
2. Production Employees
3. Each of the production
department’s supervisors
4. Each of the production
department’s supervisors

✓ Where Prepared:
1. Production Department
2. Timekeeping Department
3. Production Department
4. Production Department
Users:
➢ Production Manager
➢ Cost Accountant
Output Media: Softcopy and hardcopy Input Media: Keyboard, Biometric Fingerprint
Scanner
Frequency: Monthly

Page 8 of 25
 Output Input
Name: Production Variance Report Name: 1. Bill of Materials
2. Materials Requisition
3. Timesheet
4. Production Schedule
Purpose: To determine the difference Source:
between the debit actual costs consumed ✓ Who Prepares?
on order and the target cost which is 1. Production Engineer
based on the preliminary cost estimate 2. Production Staff
and quantity delivered to inventory. It is 3. Production Employees
used to draw attention to areas where 4. Production Control Manager
actual performance is difference from
planned activities. ✓ Where Prepared:
1. Engineering Department
2. Production Department
3. Timekeeping Department
4. Production Control Department
Users:
➢ Production Manager
➢ Cost Accountant
Output Media: Softcopy and hardcopy Input Media: Keyboard, Biometric Fingerprint
Scanner
Frequency: Monthly

B. Description of Master Files and Transaction Files

1. Master Files
Raw Materials Master File
Used for: keeping track of the materials procured, stored, and used in the production. It
provides a detailed information of the raw materials and is used as a tool for a great and
accurate data of materials inventory.

Employee Master File

Used for: storing, organizing, and managing employee’s data and to have a repository for
everything that has to do with a worker’s paycheck. It increases the productivity of the
Human Resource department, and results to a fewer level of errors in the payroll activities.

Product Master File

Used for: storing the details of the product being sold by the company.

Page 9 of 25
 2. Transaction Files

Raw Materials Inventory Status Report

Used for: determining the availability of raw materials that will be used during the
production and to ensure that the reorder level will be maintained so that the raw materials
will not go out of stock.

Physical Inventory Count Sheet

Used for: recording inventory levels and track inventory turnover. It is used to identify the
quantity of materials on hand.

Materials Requisition
Used for: requesting the materials needed by the production department to complete a
manufacturing process.

Factor Availability Report

Used for: determining how much capacity is available (machinery, time and labor) and how
much the entity can produce for a shift.

Process Capacity Sheet

Used for: determining the true capacity of a process for a shift, and the ability to meet takt
time.

Purchase Requisition
Used for: requesting from the purchasing department that enough materials be ordered to
be used in the production process and that the said materials are available at the time they
are needed.

Cost of Production Report

Used for: showing the summarized information about the flow of units and costs through
the work in process account of a processing department. It shows all costs chargeable to a
department.

Timesheet
Used for: determining the time that the production employees have spent on working in
each department.

Move Ticket
Used for: keeping track of the start and finish date of a particular task in the work center.
It is a formal record of work flow that whenever a particular work center completes the
work, it acts as the official indicator to signal that work flow is shifted to the next
department.

Production Order
Used for: managing the conversion of the purchased materials into manufactured items.

Page 10 of 25
Bill of Materials
Used for: listing all the raw materials needed in the production and their estimated costs.

Production Schedule
Used for: knowing the demands and matching those to labor, materials, and equipment
capacity. It is used to ensure that the operations work on time and under budget.

Page 11 of 25
 III. DESIGN PHASE
The actual design of the project’s input and output forms, as well as the content of the
master and transaction files, are shown below.
Output 1

JLR Corporation
Building 7, Makaturing Street, Mandaluyong City, Metro Manila
+049 523 0932
[email protected]
www.jlrcorporation.com

RAW MATERIALS INVENTORY STATUS REPORT

FROM ITEM: _____________________ TO: ______________________ PROCESS DATE: _____

ITEM TYPE: ______________________ PAGE: _____________
WAREHOUSE: ____________________

ITEM ITEM UNIT OF ON COMMITTED AVAILABLE REORDER ON UNIT TOTAL

CODE DESCRIPTION MEASURE HAND POINT ORDER COST COST

Prepared by: ______________________________ Approved by: _____________________________

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 Inputs to Output 1

JLR Corporation
Building 7, Makaturing Street, Mandaluyong City, Metro Manila
+049 523 0932
[email protected]
www.jlrcorporation.com

PHYSICAL INVENTORY COUNT SHEET

SHEET NUMBER: __________________ PROCESS DATE: ___________________

PERFORMED BY: ___________________ DEPARTMENT: ____________________
POSITION: ________________________ TYPE OF INVENTORY: _______________

INVENTORY NUMBER INVENTORY DESCRIPTION INVENTORY LOCATION QUANTITY ON HAND

Verified by:

JLR Corporation
Building 7, Makaturing Street, Mandaluyong City, Metro Manila
+049 523 0932
[email protected]
www.jlrcorporation.com

MATERIALS REQUISITION FORM

REQUISITION NUMBER: _____________ REQUISITION DATE: ________________

DEPARTMENT: ____________________

ITEM ITEM DESCRIPTION UNIT OF QUANTITY UNIT TOTAL DATE

CODE MEASUREMENT REQUESTED COST COST NEEDED

Requested by:
Received by:
Approved by:

Page 13 of 25
 Output 2

JLR Corporation
Building 7, Makaturing Street, Mandaluyong City, Metro Manila
+049 523 0932
[email protected]
www.jlrcorporation.com

FACTOR AVAILABILITY REPORT

DATE: _____________________

PROCESS PROCESS MACHINE CAPACITY DURATION EMPLOYEE REGULAR AVAILABILITY

ID DESCRIPTION NUMBER PER SHIFT NUMBER HOURS

Prepared by: Approved by:

Input to Output 2

JLR Corporation
Building 7, Makaturing Street, Mandaluyong City, Metro Manila
+049 523 0932
[email protected]
www.jlrcorporation.com

PROCESS CAPACITY SHEET

DATE: _____________________

PROCESS PROCESS MACHINE BASIC TIME TOOL CHANGE PROCESSING

NUMBER DESCRIPTION NUMBER MANUAL AUTO COMPLETION CHANGE TIME CAPACITY/SHIFT

Approved by:

Page 14 of 25
 Output 3

JLR Corporation
Building 7, Makaturing Street, Mandaluyong City, Metro Manila
+049 523 0932
[email protected]
www.jlrcorporation.com

PURCHASE REQUISITION

REQUISITION NUMBER: _____________ VENDOR NAME: __________________________

REQUISITION DATE: ________________ VENDOR CONTACT: _______________________
DATE REQUIRED: __________________ BUSINESS ADDRESS: ______________________

ITEM ITEM UNIT OF QUANTITY UNIT COST TOTAL COST DATE NEEDED
CODE DESCRIPTION MEASURE

Authorized by:

Page 15 of 25
 Output 4

JLR Corporation
Building 7, Makaturing Street, Mandaluyong City, Metro Manila
+049 523 0932
[email protected]
www.jlrcorporation.com

COST OF PRODUCTION REPORT

PRODUCTION NUMBER: ________________ PREPARED BY: __________________________

REQUISITION DEPARTMENT: _____________ DATE: _________________________________
DATE PREPARED: __________________

QUANTITY SCHEDULE

a. Quantity to Be Accounted For: UNITS

Beginning WIP
Started/Transferred In
Total Units to Be Accounted For

b. Quantity Accounted For: UNITS MATERIALS LABOR OVERHEAD

Transferred Out to Next Department

From beginning WIP
Started and Completed
Ending WIP
Total Units Accounted For

COST SCHEDULE

c. Costs to Be Accounted For: MATERIALS LABOR OVERHEAD TOTAL

Beginning WIP
Transferred-In Cost
Costs Added this Department
Total Costs to Be Accounted For
Total Equivalent Units Accounted For
Cost per Equivalent Unit

d. Costs Accounted For: MATERIALS LABOR OVERHEAD TOTAL

Transferred Out
Ending WIP
Total Costs Accounted For

Page 16 of 25
 Inputs to Output 4

JLR Corporation
Building 7, Makaturing Street, Mandaluyong City, Metro Manila
+049 523 0932
[email protected]
www.jlrcorporation.com

TIMESHEET

EMPLOYEE NAME: _________________ DEPARTMENT: ___________________

EMPLOYEE NUMBER: _______________ EXTENSION: ____________________
SUPERVISOR: _____________________

DATE START TIME END TIME REGULAR HOURS OVERTIME HOURS TOTAL HOURS

Verified by:
Date:

JLR Corporation
Building 7, Makaturing Street, Mandaluyong City, Metro Manila
+049 523 0932
[email protected]
www.jlrcorporation.com

MOVE TICKET

BATCH NUMBER: __________________ UNITS: __________________________

MOVE TO OPERATION START DATE FINISH DATE QUANTITY RECEIVED RECEIVED BY

Verified by:

Page 17 of 25
 JLR Corporation
Building 7, Makaturing Street, Mandaluyong City, Metro Manila
+049 523 0932
[email protected]
www.jlrcorporation.com

PRODUCTION ORDER

PRODUCT: __________________ START TIME: _________

END TIME: __________

DEPARTMENT PROCESS DESCRIPTION STANDARD HOURS ACTUAL HOURS UNITS PRODUCED

Verified by:

Output 5

JLR Corporation
Building 7, Makaturing Street, Mandaluyong City, Metro Manila
+049 523 0932
[email protected]
www.jlrcorporation.com

PRODUCTION VARIANCE REPORT

STANDARD ACTUAL VARIANCE

PARTICULARS QUANTITY RATE AMOUNT QUANTITY RATE AMOUNT QUANTITY RATE AMOUNT

Prepared by:
Approved by:

Page 18 of 25
 Inputs to Output 5

JLR Corporation
Building 7, Makaturing Street, Mandaluyong City, Metro Manila
+049 523 0932
[email protected]
www.jlrcorporation.com

BILL OF MATERIALS

PRODUCT NUMBER: __________________

PRODUCT DESCRIPTION: ______________

ITEM CODE ITEM DESCRIPTION QUANTITY

Prepared by:
Approved by:

JLR Corporation
Building 7, Makaturing Street, Mandaluyong City, Metro Manila
+049 523 0932
[email protected]
www.jlrcorporation.com

PRODUCTION SCHEDULE

PRODUCT NUMBER: __________________

PRODUCT DESCRIPTION: ______________

BATCH QUANTITY CUTTING DEPARTMENT ASSEMBLY DEPARTMENT PACKAGING DEPARTMENT

NUMBER START COMPLETE START COMPLETE START COMPLETE

Prepared by:
Approved by:

Page 19 of 25
 Master File 1

JLR Corporation
Building 7, Makaturing Street, Mandaluyong City, Metro Manila
+049 523 0932
[email protected]
www.jlrcorporation.com

RAW MATERIALS MASTER FILE

ITEM ITEM UNITS UNIT OF STANDARD ACTUAL LOCATION

CODE DESCRIPTION ON HAND MEASUREMENT COST PER UNIT COST PER UNIT

Master File 2

JLR Corporation
Building 7, Makaturing Street, Mandaluyong City, Metro Manila
+049 523 0932
[email protected]
www.jlrcorporation.com

EMPLOYEE MASTER FILE

EMPLOYEE NAME PRESENT CONTACT ROLE DESIGNATED HOURLY HIRE HIRE

NUMBER ADDRESS NUMBER DEPARTMENT RATE DATE DATE

Page 20 of 25
 Master File 3

JLR Corporation
Building 7, Makaturing Street, Mandaluyong City, Metro Manila
+049 523 0932
[email protected]
www.jlrcorporation.com

PRODUCT MASTER FILE

PRODUCT NUMBER PRODUCT DESCRIPTION UNIT OF MEASURE SELLING PRICE

Page 21 of 25
 IV. DEVELOPMENT PHASE
To guide the company in the implementation of the proposed conversion cycle system
of the project team, the following policies below have been suggested.
Relevant Policies Governing the System
1. Before starting the production, the production manager needs to send materials
requisition to the materials manager. Once approved, the production manager will
issue an order to start the production.
2. The Production Manager should create a production schedule that specifies the
amount of material needed (in quantity) for an estimated output. The production
should begin in accordance with the production schedule. The production manager
should monitor the production process on a regular basis to ensure that work is
completed on time and that the number of units produced is managed to maintain.
3. Once the order to start the production has been issued, each production department
will be notified and move tickets need to be signed and approved after every process
is done in each department.
4. Each production department keeps track and update in the system the direct
materials used, direct labor incurred and manufacturing overhead to facilitate
determining the cost.
5. The inventory controllers are responsible for inventory counting at the end of each
month.
6. The inventory controller must issue a purchase requisition to the purchasing
department if the inventory level has reached the reorder point so that adequate
materials will be made available.
7. The excess materials will be used in the next production run.
8. The total cost of one process is transferred as an initial cost on to next process until
the production is completed. The total cost and per unit cost at the end stage are
determined by the combined costs of various processes.
9. When 80 percent of the total produced goods have been removed from the
warehouse, the production manager will schedule the next production.
10. The method used in the inventory valuation is the FIFO method.
11. There must be security guards and installed CCTVs and alarms in the storerooms,
production departments, and finished goods warehouses.
12. Pre-numbered materials requisitions, purchase requisitions, move tickets, and
production orders must be required.
13. All manually entered transactions must be properly documented in the system and
source documents.
14. The system's username and password should only be accessible to authorized
personnel.
15. To prevent unauthorized changes to a document, files should be restricted to read-
only format.

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CONTEXT DIAGRAM

Figure 4.1: Context Diagram

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DECOMPOSED CONTEXT DIAGRAM

Figure 4.2.1: Decomposed Diagram – Production System

Page 24 of 25
Figure 4.2.2: Decomposed Diagram – Cost Accounting System

Page 25 of 25