Riordan Manufacturing – Accounting Cycle Description Essay

1332 WordsAug 21, 20086 Pages
Riordan Manufacturing – Accounting Cycle Description Introduction Riordan Manufacturing, Inc. is an industry leader in the field of plastic injection molding. Using cutting edge art design capabilities, this Fortune 1000 Enterprise Company maintains facilities in San Jose, California, Albany, Georgia, Pontiac, Michigan and Hangzhou, China, and has annual earnings of $46 million. A company does not attain and maintain this type of success by accident. Part of Riordan’s success is due to its conversion accounting cycle. This paper will initially identify the five accounting cycles and explain how Riordan uses the conversion accounting cycle. Next, the strengths and weaknesses of the internal controls related to the conversion cycle…show more content…
Next, the fixed asset cycle assists in verifying a businesses long-term growth by monitoring fixed assets acquisitions, depreciation, and disposals of fixed assets. Lastly, the conversion cycle involves converting labor and raw materials into finished goods as well as the implementation of the cost accounting function. The data provided from these five cycles give management important information to assist in the decision-making process. The Conversion Cycle The conversion cycle, which is often called the production cycle, is used in a variety of ways at Riordan Manufacturing. “The goal of a production cycle is to convert raw materials into finished goods as efficiently as possible” (Bagranoff, Simkin & Strand, 2008, p. 147). The conversion cycle is initiated when raw materials are ordered. To assist in tracking materials ordered and arrival times, Riordan uses a scheduled orders receiving report, which is submitted weekly. Additionally, a raw materials usage form is used to determine the quantity of subassemblies and final products completed daily. Furthermore, the sales department completes orders and enters them into the customer shipping and billing system. Next orders are tracked from the time they are shipped until final destination arrival. The inventory system is updated daily. At year end a physical inventory is conducted to compare discrepancies. The cycle is complete when the finished goods are transferred to
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