Blue Industries operates several laminate flooring plants. Given the competitive pricing for flooring, Blue's managers pay close attention to costs. (Click the icon to view additional information.) The corporate controller has been pleased with the success of the company's benchmarking program. However, the corporate controller has recently received anonymous e-mails that a plant manager has been manipulating his quarterly estimates of percentage of completion in an attempt to obtain the bonus. The plant in question provided the following data: (Click the icon to view the data.) Read the requirements. Requirements 1. and 2. Recalculate the cost per equivalent unit, assuming the actual percentage of completion of ending work in process was 80% for direct materials and 50% for conversion costs. Based on the revised percentage of completion amounts, recalculate cost of goods completed and transferred out and the cost of ending work in process inventory. Start by recalculating the physical flow of units and output equivalents. Summary of the Flow of Physical Units and Output in Equivalent Units; Weighted-Average Method of Process Costing, Plant C of Blue Industries for Quarter 4, 2020 Equivalent Units Physical Units Direct Conversion Materials Costs Completed and transferred out during current period Work in process, ending (given) 13,000 80%; 13,000 50% Accounted for Equivalent units of work done to date *Degree of completion reported in this plant: direct materials, 80%; conversion costs, 50%. Data table Summary of the Flow of Physical Units and Output in Equivalent Units; Weighted-Average Method of Process Costing, Plant C of Blue Industries for Quarter 4, 2020 Physical Units Equivalent Units Direct Conversion Materials Costs Completed and transferred out during current period 32,000 32,000 32,000 Work in process, ending (given) 13,000 13,000 100%; 13,000 70% Accounted for Equivalent units of work done to date 13,000 9,100 45,000 45,000 41,100 *Degree of completion reported in this plant: direct materials, 100%; conversion costs, 70%. Summary of Cost per Equivalent Unit and Costs Assigned to Units Completed and to Units in Ending Work- in-Process inventory; Weighted-Average Method of Process Costing, Plant C of Blue Industries for Quarter Costs incurred to date Divide by equivalent units of work done to date 4, 2020 Total Production Costs $ Direct Materials Conversion Costs 126,000 $ 45,000 234,270 41,100 2.80 $ 5.70 Cost per equivalent unit of work done to date Assignment of costs: Completed and transferred out (32,000 units) $ 272,000 (32,000 $2.80) (32,000 x $5.70) Work in process, ending (13,000 units) Total costs accounted for $ 88,270 360,270 $ (13,000 * $2.80) (9,100 $5.70) 126,000 $ 234,270 Requirements 1. Recalculate the cost per equivalent unit, assuming the actual percentage of completion of ending work in process was 80% for direct materials and 50% for conversion costs. 2. Based on the correct percentage of completion computed in requirement 1, recalculate cost of goods completed and transferred out and the cost of ending work in process inventory. 3. Why might managers manipulate their quarterly estimates of percentage of completion? Explain. 4. What is the ethical responsibility of each plant controller? 5. What should the corporate controller do? 6. How might the corporate controller learn whether the data provided by particular plants are being manipulated? More info - Each plant uses a process-costing system, and at the end of every quarter, each plant manager submits a production report and a production-cost report. The production report includes the plant manager's estimate of the percentage of completion of the ending work in process as to direct materials and conversion costs, as well as the quantity (sheets) of laminate flooring completed. The corporate controller uses these estimates to compute the cost per equivalent unit of work done for each input for the quarter. Plants are ranked, and the two plants with the lowest cost per equivalent unit for direct materials and conversion costs are each given a bonus and recognized in the company newsletter