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- Gary Stevens and Mary James are production managers in the Consumer Electronics Division of General Electronics Company, which has several dozen plants scattered in

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- Gary Stevens and Mary James are production managers in the Consumer Electronics Division of General Electronics Company, which has several dozen plants scattered in locations throughout the world. Mary manages the plant located in Des Moines, lowa, while Gary manages the plant in El Segundo, California. Production managers are paid o salary and get an addtional borus e al to 10% of her base salary if the entire division meets or exceeds its target profits for the year. The bonus is determined in March after the company's annual report has been prepared and issued to stockholders. Shortly after the beginning of the new year, Mary recelved a phone call from Gary that went like this: GarysBows it going, May Mary: Tine, Gary- Bow's it going with youl Gary: Greatl I juat got the prelininary protit figures for the division for laat year and e sre within $158.460 etmaking the year's target profits. All w have to dopsu tew strings, and ve11 be over the top Mary. What do you mean? Garyi Weii, one thing that would be eany to ehasge is your eatinate of the percentage completion ot your ending work in process inventories Haryi 1 don t know if I can do that, Gary. Those percentage corpletion figures are supplied by Ton winthrop, my lead supervisor, vho I have always trusted to provide us with good estinates. Besides, have already sent the percentage completion tigures to corporate Gerys Tou can alwaye tell then there was a mistake. Thisk about it, Mary. All of us managers ar* doing as much a wo ean to pull this bona. out of the hat. Tou y pot ent the cheek, but the r The final processing department in Mary's production facility began the year with no work in process inventory. During the yeat 300,000 units were transferred in from the prior processing department and 278,000 units were completed and sold Costs transferred in from the prior department totaled $55,500,000. No materials are added in the final processing department. A total of $19.958,400 of conversion cost was incurred in the final processing department during the year 1. Tom Winthrop estimated that the units in ending work in process inventory in the final processing department were 25% complete with resnect to cnats of the final precessinn of the nercentane 5 6 - Gary Stevens and Mary James are production managers in the Consumer Electronics Division of General Electronics Company, which has several dozen plants scattered in locations throughout the world. Mary manages the plant located in Des Moines, lowa, while Gary manages the plant in El Segundo, California. Production managers are paid o salary and get an addtional borus e al to 10% of her base salary if the entire division meets or exceeds its target profits for the year. The bonus is determined in March after the company's annual report has been prepared and issued to stockholders. Shortly after the beginning of the new year, Mary recelved a phone call from Gary that went like this: GarysBows it going, May Mary: Tine, Gary- Bow's it going with youl Gary: Greatl I juat got the prelininary protit figures for the division for laat year and e sre within $158.460 etmaking the year's target profits. All w have to dopsu tew strings, and ve11 be over the top Mary. What do you mean? Garyi Weii, one thing that would be eany to ehasge is your eatinate of the percentage completion ot your ending work in process inventories Haryi 1 don t know if I can do that, Gary. Those percentage corpletion figures are supplied by Ton winthrop, my lead supervisor, vho I have always trusted to provide us with good estinates. Besides, have already sent the percentage completion tigures to corporate Gerys Tou can alwaye tell then there was a mistake. Thisk about it, Mary. All of us managers ar* doing as much a wo ean to pull this bona. out of the hat. Tou y pot ent the cheek, but the r The final processing department in Mary's production facility began the year with no work in process inventory. During the yeat 300,000 units were transferred in from the prior processing department and 278,000 units were completed and sold Costs transferred in from the prior department totaled $55,500,000. No materials are added in the final processing department. A total of $19.958,400 of conversion cost was incurred in the final processing department during the year 1. Tom Winthrop estimated that the units in ending work in process inventory in the final processing department were 25% complete with resnect to cnats of the final precessinn of the nercentane 5 6

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