Your company has just adopted a just-in-time philosophy, allowing it to combine all parts of the order and it is sold as soon as it is completed. You notice two of the plants estimate their ending Work-in-Process inventories at 80%. This allows the plant managers to meet their profit goals and receive a bonus. The managers feel calculating the percent complete takes judgment and they will finish the Work-in-Process inventory first thing next year. Evaluate the manager’s reasoning and explain the effects this could have on the current and future year’s financial statements. Include any ethical issues created by the managers. Identify the options your company has, and what consequences does this creates for the company.

Answer rating: 100% (QA)

Merchandise business who buys and sells inventory need not worry about the concept of work in progress Accurately evaluating the work in progress is very important when it comes to manufacturing indus... View the full answer