Refer to the information provided in Problem 6.52, p. 286.

REQUIRED

A. Following a material flow analysis, the company's accountant estimates that 15% of the direct materials and

80% of conversion costs are classified as "waste and emissions." Assume these percentages apply to both beginning inventories and current period costs. Prepare a material fl ow cost report using the FIFO method.

B. Provide a possible explanation for the higher proportion of waste in conversion costs compared to direct materials.

C. Should the managers of Rally Company establish a goal of eliminating all waste and emissions? Explain your reasoning.

D. Suppose the managers are interested in presenting Rally as a company that is concerned about the environment. What are the pros and cons of publicly reporting data about the amount of waste in the company's manufacturing operations?