Larry Lair has recently been promoted to production manager, and so he has just Explain the production cost started to receive various managerial reports. One of the reports he has received is the report.

production cost report that you prepared. It showed that his department had 1,000 equivalent units in ending inventory His department has had a history of not keeping enough inventory on hand to meet demand. He has come to you, very angry, and wants to know why you credited him with only 1,000 units when he knows he had at least twice that many on hand.

Instructions

Explain to him why his production cost report showed only 1 ,000 equivalent units in ending inventory. Write an informal memo. Be kind and explain very clearly why he is mistaken.