Refer to the scenario located in the “Analyze, Think, Communicate” section 12-5 of Ch. 12,...

Question

Refer to the scenario located in the “Analyze, Think, Communicate” section 12-5 of Ch. 12, “Job-Order, Process, and Hybrid Costing Systems” ofFundamental Managerial Accounting Concepts
.This scenario involves an altercation between Rene Alverez and Bill Sawyer and requires you to weigh in with calculations and comments on the matter.

Read the scenario in the textbook and complete the activity below.

Compute the equivalent cost per unit, assuming the ending inventory is considered to be 40 percent complete.

Compute the equivalent cost per unit, assuming the ending inventory is considered to be 60 percent complete.

Write a 350-word summary of your calculations and findings. Comment on Mr. Sawyer’s motives for establishing the percentage of completion at 60 percent rather than 40 percent.

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Nitish Lath · Accepted Answer

a. Equivalent cost per unit – 40% complete
	Particulars
	Units
	% Completed
	Equivalent units
	Beginning inventory
	5500
	 
	 
	Started
	94500
	 
	 
	Total units transferred in
	100000
	 
	 
	 
	 
	 
	 
	Transferred out
	90000
	100%
	90000
	Closing stock
	10000
	40%
	4000
	Total units 
	100000
	 
	94000
	 
	 
	 
	 
	 
	 
	 
	 
	Total production cost
	 
	 
	902400
	 
	 
	 
	 
	Equivalent cost per unit (production cost/total equivalent units) (902400/94000)
	 
	 
	                     9.60 
b.

Refer to the scenario located in the “Analyze, Think, Communicate” section 12-5 of Ch. 12, “Job-Order, Process, and Hybrid Costing Systems” ofFundamental Managerial Accounting Concepts .This scenario...

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