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