What issues should a manager focus on when reviewing the equivalent units calculation? To show better performance,
Question:
What issues should a manager focus on when reviewing the equivalent units calculation?
To show better performance, a department supervisor might report a higher or lower degree of completion resulting in understated or overstated cost per equivalent unit and overstated or understated operating income. In other words, estimates of degree of completion can help to smooth earnings from one period to the next, controlling production cost or increase the production efficiency resulting in less waste To encourage increased productivity, guard against the possibility of bias or encourage cost savings.
Managers should ask supervisors specific questions about the process they followed. Top management should always emphasize obtaining the correct answer, regardless of how it affects reported performance or achieving the highest reported performance regardless of the method used.
This emphasis drives ethical actions or team work throughout the organization.
Essentials of Entrepreneurship and Small Business Management
ISBN: 978-0133849622
8th edition
Authors: Norman M. Scarborough, Jeffrey R. Cornwall