Considering the Repetitive Production (Make-To-Stock Scenario)

Objective

After completing this lesson, you will be able to understand the context of repetitive production (make-to-stock scenario) and its main characteristics.

Repetitive Production (Make-to-Stock Scenario)

In repetitive make-to-stock production, finished or semi-finished products are manufactured over an extended period of time within mass production. For instance, you produce handlebars (semi-finished product) for bikes using repetitive manufacturing (REM) and store them in the anonymous inventory until they are used to assemble bikes (finished product).

In this case you want to collect and analyze costs periodically on the product level. You analyze costs by period rather than by lot, which means that you collect the costs over an extended period of time and analyze them in each period. To meet these requirements, the production accounting method product cost by period is used.

The figure refers to the repetitive manufacturing of the handlebars for bikes. In the upper area the figure shows that the handlebars are repetitively manufactured and stored in the inventory. In a subsequent production processes one handlebar is withdrawn from the inventory and used to assemble a bike. In the lower area of the figure, it is shown that the actual costs that incurred from the repetitive manufacturing of the handlebars are collected periodically.

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