Jason Bieler and Nancy Delirion are production managers in the Appliances Division of Meester Corporation, which has several dozen plants scattered in locations throughout the world. Delirion manages the plant in Toronto, while Bieler manages the plant in Vancouver. Production managers are paid a salary and get an additional bonus equal to 10% of their base salary if the entire division meets or exceeds its target profits for the year. The bonus is determined in March after the company’s annual report has been prepared and issued to shareholders.

Required:

1. Janovski estimated that the units in ending inventory in the final processing department were 25% complete with respect to the conversion costs of the final processing department. If this estimate of the percentage completion is used, what will be the cost of goods sold for the year?

2. Does Bieler want Delirion to increase or decrease the estimated percentage completion? Explain why.

3. What percentage completion figure would result in increasing the reported operating income by $62,500 over the operating income that would be reported if the 25% figure were used?

4. Do you think Delirion should go along with the request to alter estimates of the percentage completion? Why or why not?