The two worksheets show the production report for the Tropical Break corporation. Assume you are the cost accountant at Tropical Break. The production manager tells you that the units in work in process are 40% complete for conversion costs and you prepare the production report accordingly. The report is shown in the worksheet labeled "Process Cost Report 40%". Joe from Sales tells you that the production department is incorrect and that work in process is 75% complete for conversion costs. You know that Joe receives a bonus based upon the operating income of the company. You revise the production report. The report is shown in the worksheet labeled, "Process Cost Report 75%." Tropical Break doesn't have ending finished goods inventory. Therefore, the total cost of goods transferred equals cost of goods sold. Sales for the period = $100,000,000. Answer the following questions. Make sure your answer fits within the margins. Use a textbox or manage the margins manually. (1 point)

Req. 1 Complete the following schedule (5 points): Using 40% Using 75% Completion Completion Sales Cost of goods sold Gross profit Req.

2: What is the benefit to Joe if the 75% completion rate is used rather than the 40%? (2 points)

Req 4: Think about determining the percentage completion for work in process. Do you think there is an actual correct percentage, or is it an estimated based upon the experience of the production manager? (2 points)

Req. 5: As the cost accountant for Tropical Break, would you use the 40% or 75% completion rate. Why? (3 points)

Tropical Break--Cost of Production Report--year-end Data: Percent Completed Units Materials Conversion Work in process, beginnning 0 0 0 Started into production 270,000 Completed and transferred out 250,000 Work in process, ending 20,000 100% 40% Costs Materials Conversion Work in process, beginnning 0 0 Started into production $ 16,335,000 $ 49,020,000 Whole Step 1: Physical flow Units Units to be accounts for: Beginning W-I-P 0 Started in production 270,000 Total Units 270,000 Step 2: Equivalent units Units account for as follows: Whole Tranferred Conversion Units In Materials Cost Completed and transferred 250,000 250,000 250,000 Ending W-I-P 20,000 20,000 8,000 Total units and equivalent units 270,000 270,000 258,000 Step 3: Cost per equivalent unit Conversion Total Cost to be accounts for: Materials Cost Cost Beginning W-I-P $ - $ - $ - Costs added during the month 16,335,000 49,020,000 65,355,000 Total cost to account for $ 16,335,000 $ 49,020,000 $ 65,355,000 Total units and equivalent units 270,000 258,000 Cost per Equivalent unit $ 60.50 $ 190.00 Conversion Total Step 4: Assign costs Materials Cost Cost Completed and transferred out $ 15,125,000 $ 47,500,000 $ 62,625,000 Ending W-I-P 1,210,000 1,520,000 2,730,000 Tota costs to account for: $ 16,335,000 $ 49,020,000 $ 65,355,000

Tropical Break--Cost of Production Report--year-end Data: Percent Completed Units Materials Conversion Work in process, beginnning 0 0 0 Started into production 270,000 Completed and transferred out 250,000 Work in process, ending 20,000 100% 75% Costs Materials Conversion Work in process, beginnning 0 0 Started into production $ 16,335,000 $ 49,020,000 Whole Step 1: Physical flow Units Units to be accounts for: Beginning W-I-P 0 Started in production 270,000 Total Units 270,000 Step 2: Equivalent units Units account for as follows: Whole Tranferred Conversion Units In Materials Cost Completed and transferred 250,000 250,000 250,000 Ending W-I-P 20,000 20,000 15,000 Total units and equivalent units 270,000 270,000 265,000 Step 3: Cost per equivalent unit Conversion Total Cost to be accounts for: Materials Cost Cost Beginning W-I-P $ - $ - $ - Costs added during the month 16,335,000 49,020,000 65,355,000 Total cost to account for $ 16,335,000 $ 49,020,000 $ 65,355,000 Total units and equivalent units 270,000 265,000 Cost per Equivalent unit $ 60.50 $ 184.98 Conversion Total Step 4: Assign costs Materials Cost Cost Completed and transferred out $ 15,125,000 $ 46,245,283 $ 61,370,283 Ending W-I-P 1,210,000 2,774,717 3,984,717 Tota costs to account for: $ 16,335,000 $ 49,020,000 $ 65,355,000