State the six functions that make up the inventory management process. For each function, identify the related documents and/or records that would be used by a manufacturing company.

Question

What will be an ideal response?

Answer 1

Inventory management function - The inventory management function maintains inventory at appropriate levels. It is responsible for producing the production schedule and issuing purchases requisitions.
Raw materials stores function - This function would typically control the issuance of raw materials and therefore handle the materials requisition forms.
Manufacturing function - The manufacturing function produces the product and therefore creates the production data information. This information is then used to update the perpetual inventory records (which is used by the general ledger function) and as input for the cost accumulation and variance reports (used by the cost accounting function).
Finished goods stores function - The finished goods function uses the shipping order forwarded from the revenue process to ship goods to the customers.
Cost accounting function - The cost accounting function ensures that costs are properly attached to inventory. It reviews the cost accumulation and variance reports to accomplish this.
General ledger function - The general ledger function maintains the records for the inventory management process. Information from the inventory master file and inventory status report is used to reconcile the perpetual inventory records to the general ledger inventory accounts.