diff --git a/intern/cycles/render/mesh.cpp b/intern/cycles/render/mesh.cpp
index db6311c3d97..42103396b53 100644
--- a/intern/cycles/render/mesh.cpp
+++ b/intern/cycles/render/mesh.cpp
@@ -1032,11 +1032,15 @@ void MeshManager::device_update(Device *device, DeviceScene *dscene, Scene *scen
 	if(!need_update)
 		return;
 
-	/* update normals */
+	/* update normals and flags */
 	foreach(Mesh *mesh, scene->meshes) {
+		mesh->has_volume = false;
 		foreach(uint shader, mesh->used_shaders) {
 			if(scene->shaders[shader]->need_update_attributes)
 				mesh->need_update = true;
+			if(scene->shaders[shader]->has_volume) {
+				mesh->has_volume = true;
+			}
 		}
 
 		if(mesh->need_update) {
@@ -1105,37 +1109,10 @@ void MeshManager::device_update(Device *device, DeviceScene *dscene, Scene *scen
 	bool motion_blur = false;
 #endif
 
-	/* TODO(sergey): There's an ongoing fake cyclic dependency between objects
-	 * and meshes here -- needs to make update functions a bit more granular in
-	 * order to keep all the updates in a logical way.
-	 */
-
 	/* update obejcts */
 	vector<Object *> volume_objects;
-	foreach(Object *object, scene->objects) {
+	foreach(Object *object, scene->objects)
 		object->compute_bounds(motion_blur);
-		if(object->mesh->has_volume) {
-			volume_objects.push_back(object);
-		}
-	}
-
-	int object_index = 0;
-	uint *object_flags = dscene->object_flag.get_data();
-	foreach(Object *object, scene->objects) {
-		foreach(Object *volume_object, volume_objects) {
-			if(object == volume_object) {
-				continue;
-			}
-			if(object->bounds.intersects(volume_object->bounds)) {
-				object_flags[object_index] |= SD_OBJECT_INTERSECTS_VOLUME;
-				break;
-			}
-		}
-		++object_index;
-	}
-
-	/* allocate object flag */
-	device->tex_alloc("__object_flag", dscene->object_flag);
 
 	if(progress.get_cancel()) return;
 
diff --git a/intern/cycles/render/object.cpp b/intern/cycles/render/object.cpp
index 986a36ba120..46ddab235d9 100644
--- a/intern/cycles/render/object.cpp
+++ b/intern/cycles/render/object.cpp
@@ -348,27 +348,9 @@ void ObjectManager::device_update_transforms(Device *device, DeviceScene *dscene
 		objects[offset+9] = make_float4(ob->dupli_generated[0], ob->dupli_generated[1], ob->dupli_generated[2], __int_as_float(numkeys));
 		objects[offset+10] = make_float4(ob->dupli_uv[0], ob->dupli_uv[1], __int_as_float(numsteps), __int_as_float(numverts));
 
-		/* That's a bit weird place to update mesh flags, but we do it here
-		 * because  object needs to know if it's a volume or not and mesh needs
-		 * to have the updated.
-		 *
-		 * TODO(sergey): Check on whether we can reshuffle update order in scene.
-		 */
-		if(ob->mesh->need_update) {
-			ob->mesh->has_volume = false;
-			foreach(uint shader, ob->mesh->used_shaders) {
-				if(scene->shaders[shader]->has_volume) {
-					ob->mesh->has_volume = true;
-					break;
-				}
-			}
-		}
-
 		/* object flag */
 		if(ob->use_holdout)
 			flag |= SD_HOLDOUT_MASK;
-		if(ob->mesh->has_volume)
-			flag |= SD_OBJECT_HAS_VOLUME;
 		object_flag[i] = flag;
 
 		/* have curves */
@@ -396,8 +378,6 @@ void ObjectManager::device_update(Device *device, DeviceScene *dscene, Scene *sc
 	
 	device_free(device, dscene);
 
-	need_update = false;
-
 	if(scene->objects.size() == 0)
 		return;
 
@@ -418,6 +398,49 @@ void ObjectManager::device_update(Device *device, DeviceScene *dscene, Scene *sc
 	}
 }
 
+void ObjectManager::device_update_flags(Device *device, DeviceScene *dscene,
+                                        Scene *scene, Progress& progress)
+{
+	if(!need_update)
+		return;
+
+	need_update = false;
+
+	if(scene->objects.size() == 0)
+		return;
+
+	/* object info flag */
+	uint *object_flag = dscene->object_flag.get_data();
+
+	vector<Object *> volume_objects;
+	foreach(Object *object, scene->objects) {
+		if(object->mesh->has_volume) {
+			volume_objects.push_back(object);
+		}
+	}
+
+	int object_index = 0;
+	foreach(Object *object, scene->objects) {
+		if(object->mesh->has_volume) {
+			object_flag[object_index] |= SD_OBJECT_HAS_VOLUME;
+		}
+
+		foreach(Object *volume_object, volume_objects) {
+			if(object == volume_object) {
+				continue;
+			}
+			if(object->bounds.intersects(volume_object->bounds)) {
+				object_flag[object_index] |= SD_OBJECT_INTERSECTS_VOLUME;
+				break;
+			}
+		}
+		++object_index;
+	}
+
+	/* allocate object flag */
+	device->tex_alloc("__object_flag", dscene->object_flag);
+}
+
 void ObjectManager::device_free(Device *device, DeviceScene *dscene)
 {
 	device->tex_free(dscene->objects);
diff --git a/intern/cycles/render/object.h b/intern/cycles/render/object.h
index 677526b715f..2c69b83a2e9 100644
--- a/intern/cycles/render/object.h
+++ b/intern/cycles/render/object.h
@@ -76,6 +76,7 @@ public:
 
 	void device_update(Device *device, DeviceScene *dscene, Scene *scene, Progress& progress);
 	void device_update_transforms(Device *device, DeviceScene *dscene, Scene *scene, uint *object_flag, Progress& progress);
+	void device_update_flags(Device *device, DeviceScene *dscene, Scene *scene, Progress& progress);
 	void device_free(Device *device, DeviceScene *dscene);
 
 	void tag_update(Scene *scene);
diff --git a/intern/cycles/render/scene.cpp b/intern/cycles/render/scene.cpp
index d0de8c51300..6c3f98bc9b0 100644
--- a/intern/cycles/render/scene.cpp
+++ b/intern/cycles/render/scene.cpp
@@ -175,6 +175,11 @@ void Scene::device_update(Device *device_, Progress& progress)
 
 	if(progress.get_cancel()) return;
 
+	progress.set_status("Updating Objects Flags");
+	object_manager->device_update_flags(device, &dscene, this, progress);
+
+	if(progress.get_cancel()) return;
+
 	progress.set_status("Updating Hair Systems");
 	curve_system_manager->device_update(device, &dscene, this, progress);