Goodwater Corporation mass-produces pencils through several processing departments. The company currently uses a process costing system and traces manufacturing costs from one process department to the next. The company produces over 90 million pencils per year. The number of pencils in production at any single point in time never exceeds 40,000.
Rick Brintnall has just been hired as the company’s cost accountant. Given the company’s annual output relative to production activity at any single point in time, Brintnall suspects that the cost of maintaining a process costing system outweighs the benefit. Therefore, Brintnall recommends that the company’s current work in process inventory accounts be eliminated, and that all manufacturing costs be charged directly to the Finished Goods Inventory account.
Defend Brintnall’s recommendation.

  • CreatedApril 17, 2014
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