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

overstated

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.