Western Michigan Office Furniture (WMOF) manufactures a variety of furniture items (e.g., desks, chairs, carrel walls, computer platforms) for a wide variety of businesses and households. Each type of furniture is called an "item" and has a unique item# for identification. WMOF is clearly a "push" type of manufacturer as they usually keep an adequate number of their 200+ items in stock, although they do quite often use expedited manufacturing runs to replenish low items, so customers are rarely faced with out-of-stock situations. Sales usually consist of large numbers of multiple items per sale on credit lines established for various customers by the WMOF credit manager.

WMOF manufactures all of its items from raw materials purchased from a variety of vendors. Each item typically takes about 8-10 different types of raw material to manufacture, and manufacturing is accomplished in discrete planned units called "assembly steps." For example, a typical step in manufacturing desks might involve 2-3 employees fastening desk tops to desk frames. Another step might involve sanding and painting those fastened parts. All manufacturing employees are grouped into five categories: schedulers, supervisors, machinists, assemblers, and painters. These categories do not overlap.

All manufacturing at WMOF is governed by scheduled production orders which individually consist of multiple scheduled assembly steps. Each furniture item at WMOF has an engineered set of assembly step-types needed to manufacture one unit of that item. Each assembly-step has multiple quantities of raw material types needed for its completion and multiple specifications of employee-type minutes needed to accomplish it. For example, a certain type of desk might need a desk top and a desk frame plus 20 minutes of assembly labor and two minutes of supervisory labor for one of its assembly steps. Conversely, specific raw material types and specific employee types may both be used multiple times (that is, on several steps) to accomplish a particular job. Actual assembly steps are supervised by a "supervisor" as are production jobs (not necessarily the same person). Assembly steps may also involve 0-2 machinists, 0-3 assemblers, and/or 0-4 painters, all of whom (including the supervisor) have their timed participation on the assembly step tracked.

Scheduled assembly describes the assembly steps required for each piece of furniture and quantities defined by the corresponding production order. The times and materials on each scheduled assembly step and corresponding costs are based on standard times and costs. When actual assembly takes place it frequently happens that scheduled assembly does not unfold as scheduled. As a result scheduled materials, times, and costs are often not identical to the actual assembly costs.

The actual manufacture of furniture and all related costs are captured on a production job. The identifier for each production job is the initial time stamp. Each production job records the actual costs of raw materials, direct labor, and supervisory labor actually used on the production job. Frequently, scheduled activities as expressed by a production order do not occur in actual production as reflected on the corresponding production order. Supervisory times for jobs are also tracked. Actual jobs are identified by a job timestamp at inception (i.e., the start of production), and actual assembly steps are also identified by a timestamp at their inception as well. Some actual job information (including the inception timestamp) is inserted into the database 2-3 days before the actual steps start.

The decision to authorize a manufacturing job is done by either a scheduler or a supervisor who initiates a production order that includes multiple scheduled assembly steps (where each scheduled assembly step is identified by a step requisition#). All jobs belong to one of four priority categories: expedited, normal, low, and background. Schedulers may authorize expedited, normal, or low priority runs, while supervisors may authorize low or background priority. Each scheduled job of a certain type has a cost-assessment percentage assigned to its totals after manufacturing is complete. For example, all expedited jobs are costed at 150 % while all background jobs are costed at 50 %. Since employees are assessed on cost parameters, these varying percentages provide strong incentives to supervisors and schedulers to pick the lowest priority possible for manufacturing while still trying to keep finished good safety stocks at acceptable levels for the WMOF sales force.

For scheduling, the responsible production-order employee first looks at the standard "per unit" needed for materials and labor. Then, he or she designates a projected count of employee types and a standard quantity of raw materials for all scheduled assembly steps. You may assume that assembly steps are "labor-divisible" or fungible, so for example, putting four painters on a task will make it twice as fast as assigning two painters (I know that this is an assumption open to challenge, but make it anyway). Only employee types, not actual employees, are scheduled at this time. Supervisors for jobs are designated at job inception, and these supervisors pick and manage the designated portfolio of employees for assembly steps during the actual manufacturing run. You may assume that these choices always conform to scheduled standards. You may also assume that assembly steps and jobs are never done "on-the-fly," although there are (somewhat infrequently) scheduled production orders and assembly steps that do not come to fruition.

SIMPLIFYING ASSUMPTIONS:

In order to simplify the solution of this modeling problem, you may make the following assumptions:

1. You may assume that all "economic agents" and all "economic resources" are put into the database before any associations with other entities are instantiated. For types, you may assume the same except where evidence and reasoning strongly indicate that associations are needed upon insertion. For events and/or commitments, you may assume that their components are needed at insertion unless timing needs indicate instantiation of associations at a later point.

2. Do not worry about (or include) any other accounting cycles or cash events not detailed in the case.

3. Don't worry about the use of machines and/or tools in manufacturing. Even if you think they are needed in the WMOF manufacturing model, don't try to include them. Assume the manufacturing inputs consist solely of raw materials and labor.

Accounting

The installment for the resource, events, and agent modelling project is detailed below. There are two parts to the installment both based on the Western Michigan Office Furniture (WMOF) Company.

1. Develop the value chain diagram for the WMOF. Please remember that this case focuses only on the conversion accounting cycle. You will only know the economic duality events for the conversion accounting cycle. Fully develop the value chain diagram for the conversion cycle and represent the other, appropriate accounting cycles without the economic duality events. The idea is to show the inflows and outflows among all the appropriate accounting cycles with the economic duality events shown only for the conversion cycle.
2. Develop the resource, events, and agents (REA) diagram for the conversion cycle of WMOF.

Additional Notes:

1. Develop these two diagrams on separate pages.
2. Create your final diagrams in a computer-based drawing program (e.g., Microsoft PowerPoint; Microsoft Word).

Answer rating: 100% (QA)

ANSWER An accounting system can be examined through other models A popular alternative is the REA mo... View the full answer