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Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
Edition 2ISBN: 978-0077274993Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
Edition 2ISBN: 978-0077274993 Exercise 15
Compute Equivalent Units: Ethical Issues Aaron Company has a process costing system. All materials are introduced when conversion costs reach 50 percent. The following information is available for physical units during August.
Required
a. Compute the equivalent units for materials costs and for conversion costs using the weightedaverage method.
b. Compute the equivalent units for materials costs and for conversion costs using the FIFO method.
c. The company president has been under considerable pressure to increase income. He tells the controller to change the estimated completion for ending work in process to 60 percent (from 40 percent).
1. What effect will this change have on the unit costs of units transferred to finished goods in August
2. Would this be ethical
3. Is this likely to be a successful strategy for affecting income over a long period of time
Required
a. Compute the equivalent units for materials costs and for conversion costs using the weightedaverage method.
b. Compute the equivalent units for materials costs and for conversion costs using the FIFO method.
c. The company president has been under considerable pressure to increase income. He tells the controller to change the estimated completion for ending work in process to 60 percent (from 40 percent).
1. What effect will this change have on the unit costs of units transferred to finished goods in August
2. Would this be ethical
3. Is this likely to be a successful strategy for affecting income over a long period of time
Explanation
Verified
Verified
a.
Prepare a statement showing calculat...
Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
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