JDI Wallboard Virtual Factory Tour Reflection

JDI Wallboard Virtual Factory Tour Reflection

The virtual factory tour of JDI Wallboard, a manufacturer that specializes in creating high-quality wallboard products, was illuminating regarding their inventory management system and manufacturing procedure. This report sheds light on how the factory's inventory management system, in particular, the use of standard costing and how it impacts its financial statements. The report also outlines the firm's inventory management method and how manufacturing overhead costs are allocated to its merchandise.

JDI Wallboard employs a standard costing inventory system, which entails setting a standard amount and pricing for raw materials and modifying it throughout the year. This enables them to obtain real-time financial information using operational statements and a Tableau dashboard. The business solely keeps track of raw material and final goods inventories; process inventories are not considered. This is due to their usage of a barcoding facility, which offers immediate visibility into inventory levels and employs flex budgeting to consider price and quantity fluctuations. Setting the standard quantity and cost, which considers the raw material receiving price, correcting for currency rates, and anticipated market circumstances is the first step in the inventory process. Next, the process manager enters the bill of materials, and accounting inputs the expenses. There are 70 separate cost components and bills of materials files for the JDI Wallboard. Following establishing the standard amount and cost, the corporation acquires the necessary materials, receives the items, and records the expenditures in the general ledger.

JDI Wallboard incorporates manufacturing overhead costs, including utilities, rent, and indirect labor, in its production process. The costs are distributed among their goods using a predefined overhead rate obtained by dividing the whole manufacturing overhead expenses by the entire allocation base. A direct labor or machine hour typically serves as the allocation base. The manufacturing overhead cost is then calculated by multiplying the actual amount of the allocation base required to make each product by the specified overhead rate. The barcoding system controls the standard raw material amounts during the continuous manufacturing process, and the cost components file calculates the exact production costs. When a wallboard is loaded into a truck, it is removed from inventory, and an invoice is generated in the system.

In conclusion, JDI Wallboard utilizes a standard costing inventory system to obtain financial data in real-time using operating statements and a Tableau dashboard. Only finished items and raw materials are included in the company's accounting; work-in-progress inventory is not. Manufacturing overhead expenses are a part of JDI Wallboard's production process and are distributed across their goods based on a specified overhead rate. The organization's inventory management system is effective, and using barcoding tools gives quick access to inventory levels.