Question 2.3 Assume that you are the company's controller. The Mixing department's April equivalent unit cost is higher than expected. If the manager of the Mixing department asks you to do him a favour by increasing the ending inventory completion percentage from 40 to 60% to lower the unit costs, what should you do? Your response should include how earnings of April can be manipulated by misstating the degrees of completion of finished equivalents units to result in higher profit. [Word limit: 300 words. Note the word count at the end of your answer.] (10 marks) Your Answer (expand the space as required): Word count=Fresco Company Limited, Hawkes Bay, makes a unique syrup using manuka honey and local herbs. The syrup is sold in small bottles and is priced as a flavouring for drinks and for use in desserts. The bottles are sold for $12 each. The first stage in the production process is carried out in the Mixing Department, which removes foreign matter from the raw materials and mixes them in the proper proportions in large vats. The company uses the weighted-average method in its process costing system. A hastily prepared report for the Mixing Department for April appears below: Units to be accounted for: Work in process, April 1 (materials 90% complete; conversion 2,000 10% complete) Units started into production in April 47,600 Total units to be accounted for 49,600 Units accounted for as follows: Units completed and transferred to the next department 47,800 Work in process, April 30 (materials 70% complete; 1,800 conversion 40% complete) Total units accounted for 49,600 Cost Reconciliation Cost to be accounted for: Work in process, April 1 (Direct materials $3, 692; $6,568 conversion costs $2,876) Cost added during the month (Direct materials $71,363; conversion costs $543,079) 614,442 Total cost to be accounted for $621,010 Cost accounted for as follows: Work in process, April 30 $ 10,029 Transferred to next department 610,981 Total cost accounted for $621,010 The management is not convinced of the format of the report. The management would like some additional information about the company's performance. In addition, the CFO of the company is thinking to use FIFO method instead of Weighted average method