Equivalent Units

Physical

Direct

Conversion

Flow of Production

Units

Materials

Costs

Work in process beginning

$4,000$

Started during current period

$22,500$

To account for

$26,500$

Completed and transferred out during current period

$26,000$

$26,000$

$26,000$

Work in process, ending

$500$

$500$

$325$

Accounted for

$26,500$

Work done to date

$26,500$

$26,325$

Part $2$

Requirement $2.$ What issues should the manager focus on when reviewing the$$ equivalent$-$unit calculations?

To show better$$ performance, a department supervisor might report a

higher

degree of completion resulting in

understated

cost per equivalent unit and

overstated

operating income. In other$$ words, estimates of degree of completion can help

to smooth earnings from one period to the next.

To guard against the possibility of bias,

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.

This emphasis drives

ethical actions

throughout the organization.

Part $3$

Requirement $3.$ For each cost$$ category, summarize total assembly department costs for October $2020$ and calculate cost per equivalent unit.

Begin by summarizing the total assembly department costs for October $2020.$

Total

Direct

Conversion

Production Costs

Materials

Costs

Total costs to account for