Olivia Company utilizes process costing in its manufacturing company for a product that passes through two departments, Assembly and Finishing. Data relating to the product processed in the Finishing Department, during July are presented as follows:

	Physical Units	Direct Material Costs	Conversion Costs
Work in Process, beginning	12,000	$120,000	$351,000
Started into Processing	62,000	$325,000	$980,000

The units in beginning work in progress were 40% complete with respect to direct materials and 80% complete with respect to conversion costs. The company had 20,000 units on hand at the end of the period which were 60% complete as to materials and 90% complete as to conversion costs. Required:

a. Compute the total units and equivalent units for the Finishing Department, according to the weighted average method of accounting for units.

b. Calculate the cost per equivalent unit using the weighted average method of costing. Round your answer to two decimal places.

Question 2

Kane Company is submitting the following information for three of their Canadian operating divisions.

	Division A	Division B	Division C
Sales	$500,000	$400,000	$800,000
Average operating assets	$400,000	$500,000	$500,000
Operating Income	$60,000	$50,000	$70,000
Minimum required rate of return	10%	12%	14%

Senior management have asked for your help in understanding the impact of performance measures on manager decision-making. They have asked you to consider what would occur if each if the divisions were presented with an investment opportunity that would yield an annual rate of return of 13%.

Required:

a. Assume that the managers of the divisions are being evaluated based on ROI. Which division(s) would likely accept the investment opportunity? Which division(s) would likely reject the investment opportunity? Why?

b. Assume that the managers of the divisions are being evaluated based on residual income. Which division(s) would likely accept the investment opportunity? Which division(s) would likely reject the investment opportunity? Why?