Question

In: Accounting

Aaron Company has a process costing system. All materials are introduced when conversion costs reach 50...

Aaron Company has a process costing system. All materials are introduced when conversion costs reach 50 percent. The following information is available for physical units during March.

Work in process, March 1 (60% complete as to conversion costs) 150,000
Units started in March 600,000
Units transferred to Finishing Department in March 630,000
Work in process, March 31 (40% complete as to conversion costs) 120,000

Required

Compute the equivalent units for materials costs and for conversion costs using the weighted-average method.

Compute the equivalent units for materials costs and for conversion costs using the FIFO method.

The company president has been under considerable pressure to increase income. He tells the controller to change the estimated completion for ending work in process to 60 percent (from 40 percent).

What effect will this change have on the unit costs of units transferred to finished goods in March?

Would this be ethical?

Is this likely to be a successful strategy for affecting income over a long period of time?

Solutions

Expert Solution

Weighted Average Method
Particulars Direct Materials %completion Equivalent mat Conversion %completion Equivalent Conv
Opening WIP               150,000.00 100%              150,000.00     150,000.00 100%          150,000.00
Units started and completed = 630,000 - 150,000               480,000.00 100%              480,000.00     480,000.00 100%          480,000.00
ending WIP               120,000.00 0%                               -       120,000.00 40%            48,000.00
Equivalent Units              630,000.00          678,000.00
FIFO Method
Particulars Direct Materials %completion Equivalent mat Conversion %completion Equivalent Conv
Opening WIP               150,000.00 0%                               -       150,000.00 40%            60,000.00
Units started and completed = 630,000 - 150,000               480,000.00 100%              480,000.00     480,000.00 100%          480,000.00
ending WIP               120,000.00 0%                               -       120,000.00 40%            48,000.00
Equivalent Units              480,000.00          588,000.00
Changing ending work in process to 60 percent would reduce per unit cost as no of equivalent units will increase
This is unethical as we are manipulating the data to reduce costs and show better performance
No this is not successful as during next period they have to show heir % completion as 40% so cost per unit willincrease  

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Aaron Company has a process costing system. All materials are introduced when conversion costs reach 50...
Aaron Company has a process costing system. All materials are introduced when conversion costs reach 50 percent. The following information is available for physical units during March. Work in process, March 1 (60% complete as to conversion costs) 150,000 Units started in March 600,000 Units transferred to Finishing Department in March 630,000 Work in process, March 31 (40% complete as to conversion costs) 120,000 Required Compute the equivalent units for materials costs and for conversion costs using the weighted-average method....
Fedora, Inc, uses a weighted-average process-costing system and has one production department. All materials are introduced...
Fedora, Inc, uses a weighted-average process-costing system and has one production department. All materials are introduced at the start of manufacturing; in contrast, conversion cost is incurred uniformly throughout production. The company had respective work-in-process inventories on May 1 and May 31 of 63,000 units and 75,000 units, the latter of which was 50% complete. The production supervisor noted that Fedora completed 110,000 units during the month. Costs in the May 1 work-in-process inventory were subdivided as follows: materials, $45,000;...
Fedora, Inc, uses a weighted-average process-costing system andhas one production department. All materials are introduced...
Fedora, Inc, uses a weighted-average process-costing system and has one production department. All materials are introduced at the start of manufacturing; in contrast, conversion cost is incurred uniformly throughout production. The company had respective work-in-process inventories on May 1 and May 31 of 63,200 units and 76,000 units, the latter of which was 50% complete. The production supervisor noted that Fedora completed 112,000 units during the month.Costs in the May 1 work-in-process inventory were subdivided as follows: materials, $46,000; conversion,...
Galaxy Manufacturing uses a weighted-average process costing system. All matierals are introduced at the start of...
Galaxy Manufacturing uses a weighted-average process costing system. All matierals are introduced at the start of manufacturing, and conversion costs are incurred evenly throughout the process. The comapny's beginning and ending work-in-process inventories totaled 25,000 units and 28,000 units, respectively, with the latter being 70% complete at the end of the period. Galaxy started 45,000 units into the production and completed 42,000 units. Manufacturing costs follow: Beginning work-in process: Materials: $60,000 Coversion Cost: $165,000 Current costs: Materials: $175,000 Conversion Cost:...
Williams uses a weighted-average process-costing system. All materials are added at the beginning of the process;...
Williams uses a weighted-average process-costing system. All materials are added at the beginning of the process; conversion costs are incurred evenly throughout production. The company finsihed 150,000 units during the period and has 80,000 units in progress at year-end, the latter at the 40% stage of completion. Total material costs amounted to $1,350,000; coversion costs were $1,600,000. The cost of the ending work-in process is?
Williams uses a weighted-average process-costing system. All materials are added at the beginning of the process;...
Williams uses a weighted-average process-costing system. All materials are added at the beginning of the process; conversion costs are incurred evently throughout poduction. The company finished 150,000 units during the period and has 80,000 units in progress at year, the latter at the 40% stage of completion. Total materia costs amounted to $1,350,000; conversion costs were $1,600,000. The cost of the ending work-in-process is:
a) The Jackpots Dreams Cards Company is a card manufacturer. All direct materials and conversion costs...
a) The Jackpots Dreams Cards Company is a card manufacturer. All direct materials and conversion costs are applied to all of Proball Trading Cards’ products at an even rate throughout the manufacturing process. For August, the beginning work in process inventory for the Finishing Department was 9,600 units that averaged 65 percent complete. Ending work in process inventory was 18,500 units averaging 45 percent complete. Production data shows 188,400 units were started during the period. Beginning work in process inventory...
Dolls manufactures dolls. Materials are added at the beginning of the process and conversion costs are...
Dolls manufactures dolls. Materials are added at the beginning of the process and conversion costs are incurred evenly throughout the process. Data for July follows: Production Data Units Percent Complete Units in process, July 1 120 75% Units started into production 380 Units in process, July 31 100 50% Cost Data Work in process, July 1: Costs added during the month: Materials $1,000 Materials $4,000 Labour 500 Labour 300 Manufacturing overhead 750 Manufacturing overhead 2,500 Required: Using the weighted average...
Materials are added at the beginning of the process and conversion costs are added uniformly. Work...
Materials are added at the beginning of the process and conversion costs are added uniformly. Work in? process, beginning: Number of units 15 comma 00015,000 Transferredminus?in costs ?$94,000 Direct materials? (100%) ?$22,500 Conversion costs? (75%) ?$25,400 Units transferredminus??in: Number of units 52 comma 50052,500 Transferredminus?in costs ?$640,500 Units completed 41 comma 00041,000 Costs during the? period: Direct materials ?$155,475 Conversion costs ?$213,225 Work in? process, ending: Number of units 26 comma 50026,500 ?(100% complete for materials and? 35% complete for?...
Atlantic manufacturing company uses process costing. All materials are added at the beginning of the process....
Atlantic manufacturing company uses process costing. All materials are added at the beginning of the process. The company uses weighted average method in measuring unit costs. There are 100,000 units in the beginning work-in-process in the month of May (The company started its production in late April and did not finish producing any unit). The conversion work is 70% complete. The costs of beginning WIP are $1,250,000, including $100,000 of input of materials ($1 per EU), and $140,000 for labor...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT