There were 5,000 units in process in the Cutting Department of Rosella Company at the beginning of
Question:
There were 5,000 units in process in the Cutting Department of Rosella Company at the beginning of February. These units had materials and conversion costs of $48,000 and were 60 percent com- plete for conversion costs. Materials are added at the beginning of the process. During February, 60,000 units were started. The ending inventory for the month totaled 8,000 units, 25 percent complete for conversion costs. The unit cost calculation shows $4 for materials and $8 for conversion costs.
Required:
1. Compute the cost of units completed and transferred to the next department.
2. Compute the cost of units in the ending inventory for the month.
3. Why might the production manager wish to inflate the estimate of the degree of completion of the ending inventory from 25 percent to 50 percent? Support your answer with computations.
Step by Step Answer:
Managerial Accounting
ISBN: 9780538842822
9th Edition
Authors: Harold M. Sollenberger, Arnold Schneider, Lane K. Anderson