Fiscal Operation and Control Procedures

(1) Cost Accounting Systems - General. (a) All costs in Correctional Industries associated with manufacturing operations shall be properly accumulated to facilitate planning, pricing, product or service profitability, work force performance and decision making. (b) The four major elements comprising the cost of a Correctional Industry product are: 1. Material; 2. Labor; 3. Manufacturing Overhead; 4. Marketing/Administrative Expenses/Reserves. (2) Accounts Receivable (A/R). The accounts receivable function will be kept in prison industries central office. Upon notification by an industries program that a product has been shipped or a service completed for a customer, correctional industries will bill the customer. (3) Overdue Accounts Receivable. Overdue accounts are reviewed monthly and monitored for appropriate follow up. (4) Monthly Reports. All shop supervisors shall submit financial information as required in order to complete monthly financial reports. (5) Inventories. All correctional industries organizational units will keep a perpetual inventory of raw materials, work in process and finished goods. The value of raw materials shall be calculated using the “Average Cost Method” of inventory valuation system. The value of work in process and finished goods will be valued according to the job production ticket and selling price respectively. It is the responsibility of the Industries Supervisor at each institution to make sure raw material requisitions and timecard information are provided to the Assistant to the Supervisor by his Industrial Instructor III’s so that accurate job production costs on the job lot tickets can be accumulated. (6) Job Order Cost System. The Job Order Cost System allows management to compare budgeted to actual costs on each job which passes through production. It is particularly useful where products are made to customer’s specifications and the identity of the individual job is maintained or standard products are made in batches and not on a continuous basis. (7) Process Cost Accounting System. A process cost accounting system is an accounting procedure which is used when production is a continuous process and in which individual job identity is lost. In the Process Cost Accounting System, budgeted costs are set up the same as in the Job Order Cost Accounting System. However, comparisons between budgeted and actual costs are made only at the end of an accounting period in a process cost system rather when an order or batch is completed as in the Job Order System. (8) General Fund Appropriation. Correctional Industries receives an annual appropriation for salaries, some support costs, as well as material costs to manufacture license plates for the Registry of Motor Vehicles. (9) Restricted Revenue. Restricted revenue funds become available from the sale of industries products and services. These funds are accumulated in a central account under the control of the Comptroller’s Bureau.