Assume you are the cost analyst who prepared the production report that appears in Exhibit 4–8. You receive a call from Minesh Patel, a new hire in the company’s Accounting Department, who is not sure about what needs to be done with the cost reconciliation portion of the report. He wants to know what journal entries should be prepared and what balances need to be checked in the company’s accounts.

Required:

Write a memorandum to Patel that explains the steps that should be taken. Refer to specific amounts on the cost reconciliation portion of the production report to ensure that he properly completes the steps.