Inventory and production

Question 1

Issuing raw materials

Answer 1

1. The branch manager/ Inventory clerk must place an order at the central inventory warehouse by making use of pre-numbered, pre-numbered raw material requisition

Raw material requisition(Doc)( manufacture clerk)
Copies:
- Raw material warehouse
- Accounting department
- Branch/ warehouse

Details:
- Date
- Signature of raw factory manager
- Branch name
- Quantity and description

2. Raw Material transfer note(Doc)
   The warehouse assistant(Central warehouse) prepares the item due for transfer (based on the requisition note) and completes a raw material transfer note with it

Copies
- Branch( with items)
- Central warehouse
- Accounting warehouse

Details
- pre-numbered, pre-printed
- despatch date
- quantity, quality and description
- To which brand
- signature of raw material warehouse manager

3. Security
   - When being dispatched, the security guard/ head store manager must compare items sent with info on raw material transfer notes and only allow items on it to leave. Then, it must be signed
4. Recon
   - Raw material warehouse/ store manager
   - Check raw material transfer note vs authorised raw material requisition(Daily)
   - Review the number sequence of raw material requisition and raw material transfer notes and follow up on missing numbers
5. Receive inventory at branches:
   - The branch manager receives inventory items from the warehouse and must:
   - Compare raw material requisition and raw material transfer notes (Daily)
   - Any deviations must be recorded on raw materials transfer note and then should be signed- delivery driver must also sign
6. Accounting department
   - Update inventory records-
   - Increase work in progress
   - Decrease raw materials

Question 2

Production

Answer 2

Transfer to finished goods store

1. Finished goods transfer note(Doc)(production foreman)

Copies:
- Finished goods store
- own records(production factory)
- Accounting department

Details:
- Pre-numbered, pre-printed
- Quantity and description
- Date
- Department sent to finished goods warehouse
- Signed and authorised by production manager

2. Inventory records updated to reflect transfer by on independent accountant personnel
   - Finished goods increase
   - WIP decrease
3. Perpetual( Might not be in exam)
   - Stock barcoded
   - Barcode physical stock must be checked against theoretical stock frequently(weekly) by the sales assistant or branch manager- records updated by an accountant and re-order when stock is low

Question 3

Before count

Answer 3

Must take place as close to year-end as possible at least once a year- date given to everyone concerned by written instructions

Planning meeting:

• well in advance
• Everyone learns their duties and responsibilities
• Staff involved in inventory count can NOT be involved in the daily control and recording of staff items

Staff

• 3 supervisors
• Two teams of two per store
• Teams for differences already appointed before

Stores must be neatly packed before= easy-to-count

There are no spaces and all items are easily identifiable(Marked)

Access to only counters, coordinates and supervisor

If possible no inventory must moved on an accounting day- if so, it should be kept separately and documented accordingly

Question 4

During count

Answer 4

Count Sheet:
- Pre-numbered, pre-printed, no Tippex or eraser pencil
- Must be issued by the supervisor to counter
- Counters must sign
- Supervisors must take back all count sheets( even unused ones) and check that counters have signed
- Unused lines crossed out

Count sheet register:
Used to record which counting sheets have been issued to which counting teams

Headings:
- Description of items
- location of items
- Count per item
- Space for signature of counters
- Unused lines crossed out

Counters:
- Must work through the store systematically
- After count, it should be marked as counted(sticker)
- All stock must be counted a second time
- Must identify obsolete or damaged stock and stock it separately

Question 5

After count

Answer 5

Supervisor: On retrieval of count sheets
- Check number sequence
- Check for errors or mistakes
- Check that no unauthorised changes have been made to count sheet
- Count sheet signed
- Sign Count sheet register on retrieval of all count sheets and hand them to the coordinator

Coordinator:
- Check all stores and items have been counted
- Reconcile count sheets of both teams and if there are any differences they are recorded by a third party( pre-determined)
- No unauthorised changes can be made by coordinator on the count sheet once returned

Inventory Manager:
Checks first and second count match- no teams may leave until differences are resolved

Quantities of inventory systems compared to count sheet- of them don’t correspond

= items must be recounted
= necessary corrections (Theft or damages)
= Accountant must review comparison and make inventory corrections then must sign