Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. aaron company has a process costing system. all ma

Aaron Company has a process costing system. All materials are introduced when conversion costs reach 50...

Free

50.1K

Verified Solution

Question

Accounting

Aaron Company has a process costing system. All materials areintroduced when conversion costs reach 50 percent. The followinginformation is available for physical units during March.

Work in process, March 1 (60% complete as to conversioncosts)150,000
Units started in March600,000
Units transferred to Finishing Department in March630,000
Work in process, March 31 (40% complete as to conversioncosts)120,000

Required

Compute the equivalent units for materials costs and forconversion costs using the weighted-average method.

Compute the equivalent units for materials costs and forconversion costs using the FIFO method.

The company president has been under considerable pressure toincrease income. He tells the controller to change the estimatedcompletion for ending work in process to 60 percent (from 40percent).

What effect will this change have on the unit costs of unitstransferred to finished goods in March?

Would this be ethical?

Is this likely to be a successful strategy for affecting incomeover a long period of time?

Answer & Explanation Solved by verified expert
3.8 Ratings (506 Votes)

Weighted Average Method
Particulars Direct Materials %completion Equivalent mat Conversion %completion Equivalent Conv
Opening WIP               150,000.00 100%              150,000.00     150,000.00 100%          150,000.00
Units started and completed = 630,000 - 150,000               480,000.00 100%              480,000.00     480,000.00 100%          480,000.00
ending WIP               120,000.00 0%                               -       120,000.00 40%            48,000.00
Equivalent Units              630,000.00          678,000.00
FIFO Method
Particulars Direct Materials %completion Equivalent mat Conversion %completion Equivalent Conv
Opening WIP               150,000.00 0%                               -       150,000.00 40%            60,000.00
Units started and completed = 630,000 - 150,000               480,000.00 100%              480,000.00     480,000.00 100%          480,000.00
ending WIP               120,000.00 0%                               -       120,000.00 40%            48,000.00
Equivalent Units              480,000.00          588,000.00
Changing ending work in process to 60 percent would reduce per unit cost as no of equivalent units will increase
This is unethical as we are manipulating the data to reduce costs and show better performance
No this is not successful as during next period they have to show heir % completion as 40% so cost per unit willincrease  

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Civil Engineering
1.2K views

Consider a rectangular channel with a variable width b and horizontal channel bottom, a) Obtain the...

Psychology
1.2K views

What goals do you have to improve your communication processes?

Psychology
1.2K views

What are some similarities between the contemporary psychodynamic theories? Which do you believe has had the...

Electrical Engineering
1.2K views

Q1. The major cause of voltage sag is A. Malfunction of primary component B. Equipment Failure C. Starting...

General Management
1.2K views

explain each element of the Three-Skill Approach. In your own words.

Statistics
1.2K views

A manufacturer makes bags of popcorn and bags of potato chips The average w 0...

Statistics
1.2K views

Suppose that the duration of a particular type of criminal trial is known to be...

Algebra
1.2K views

1 Given the functions f x h x 4x 5x 2 determine g x 3x...

Algebra
1.2K views

Decide whether perimeter or area would be used to find the quantity of track needed...

Algebra
1.2K views

5 2 Graph the solution to the system y 7 y2 3 Show Your Work

Accounting
1.2K views

How do you do it in Xero Cash purchase of equipment The company purchased a...

Accounting
1.2K views

Marvel Parts, Incorporated, manufactures auto accessories. One of the companys products is a set of...