Valpaige Company is an industrial machinery and equipment manufacturer with several production departments. The company employs automated


Valpaige Company is an industrial machinery and equipment manufacturer with several production departments. The company employs automated and heavy equipment in its production departments. Consequently, Valpaige has a large repair and maintenance (R& M) department for servicing this equipment.
The operating efficiency of R& M has deteriorated over the past 2 years. Further, repair and maintenance costs seem to be climbing more rapidly than other department costs. The assistant controller has reviewed the operations of R& M and has concluded that the administrative procedures used since the early days of the department are outmoded due in part to the growth of the company. The two major causes for the deterioration, in the opinion of the assistant controller, are an antiquated scheduling system for repair/ maintenance work and the actual cost system to distribute R& M’s costs to the production departments. The actual costs of R& M are allocated monthly to the production departments on the basis of the number of service calls made during each month. The assistant controller has proposed that a formal work- order system be implemented for R& M. The production departments would submit a service request to R& M for the repairs and/ or maintenance to be completed, including a suggested time for having the work done. The supervisor of R& M would prepare a cost estimate on the service request for the work required (labor and materials) and indicate a suggested time for completing the work on the service request. R& M’s supervisor would return the request to the production department that initiated the request. Once the production department Okays the work by returning a copy of the service request, R& M’s supervisor would prepare a repair/ maintenance work order and schedule the job. This work order provides the repair worker with the details of the work to be done and is used to record the actual repair/ maintenance hours worked and the materials and supplies used. Producing departments would be charged for actual labor hours worked at a predetermined standard rate for the type of work required. The parts and supplies used would be charged to the production departments at cost.
The assistant controller believes that only two documents would be required in this new system— a repair/ maintenance service request initiated by the production
Departments and the repair/ maintenance work order initiated by R& M.

a. For the repair/ maintenance work- order document,
1. Identify the data items that would be important to R& M and the production departments that should be incorporated into the work order.
2. Indicate how many copies of the work order would be required, and explain how each copy would be distributed.
b. Prepare a document flow diagram to show how the repair/ maintenance service request and the repair/ maintenance work order should be coordinated and used among the departments of Village to request and complete the repair/ maintenance work, to provide the basis for charging the production departments for the cost of the completed work, and to evaluate the performance of R& M. Provide explanations to the flow diagram as appropriate.

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Accounting Information Systems

ISBN: 9780132871938

11th Edition

Authors: George H. Bodnar, William S. Hopwood

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