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Ren Alverez knew she was in over her head soon after she took the job Even so, the opportunity for promotion comes along rarely
Ren Alverez knew she was in over her head soon after she took the job Even so, the opportunity for promotion comes along rarely and she believed that she Mould grow into it. Ms. Alverez is the cost accounting specialist assigned to the finishing department of Standard Tool Company Bill Sawyer, the manager of the finishing department. knows exactly what he is doing. In each of the three years he has managed the department, the cost per unit of product transferred out of his Work in Process Inventory account has declined. Hs ability to control cost is highly valued. and it is widely believed that he will be the successor to the plant manager, who is being promoted to manufacturing vice president, One more good year surely seal the deal for Mr. Sav.yer_ It was little that Ms. Alverez was uncomfortable in challenging Mr. estimate of the percentage of completion ofthe department's ending inventory He contended that the inventory was 60 percent complete. but she believed that it was only about 40 percent complete. After a brief altercation. Ms. Alverez agreed to sign off on Mr. Sav.yer's estimate. The truth was that although she believed she was right. she did not know hog,' to support her position. Besides, Mr. Sawyer was about to be named plant manager, and she felt it unwise to challenge such an important person The department had beginning inventory of ,500 units of and it started 94,500 units during the period. It transferred out 90.000 units during the period. Total transferred-in and production cost for the period was S902.400. This amount included the cost in beginning inventory plus additional costs incurred during the period, The target (standard) cost per unit is S9_4S. Required a. Determine the equivalent cost unit. assuming that the ending inventory is considered to be 40 percent complete b. Determine the equivalent cost per unit, assuming that the ending inventory is considered to be 60 percent complete. c. Comment on Mr. motives for establishing the percentage Of completion at 60 percent rather than 40 percent _
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