Cost of Production Report and Ethics. Pfeffer Specialty Foods, Inc. prepares and cans tasty Italian foods in three processing operations. All materials are added at the beginning of the first operation. Data for the month of May in Operation A are given as follows:

The beginning work in process was 20 percent complete for labor and over- head. During the month, 115,000 units were completed and transferred to Opera- tion B; and 10,000 units that were 20 percent complete as to labor and overhead were in process in Operation A at May 31.

Required: 

1. Prepare a cost of production report for Operation A for the month of May.

2. Explain how management might use this cost of production report.

3. What might motivate the production manager to inflate the estimate of the degree of completion of the ending inventory from 20 percent to 40 percent? Support your answer with computations.