Question

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

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 March.

Work in process, March 1 (60% complete as to conversion costs) 159,000
Units started in March 618,000
Units transferred to Finishing Department in March 648,000
Work in process, March 31 (40% complete as to conversion costs) 129,000

Required:

a. Compute the equivalent units for materials costs and for conversion costs using the weighted-average 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).

c-1. What effect will this change have on the unit costs of units transferred to finished goods in March?

c-2. Would this be ethical?

c-3. Is this likely to be a successful strategy for affecting income over a long period of time?

Compute the equivalent units for materials costs and for conversion costs using the weighted-average method.
Equivalent Units
Materials
Conversion costs

Compute the equivalent units for materials costs and for conversion costs using the FIFO method.
Equivalent Units
Materials
Conversion costs

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).

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

A.The change will reduce the unit cost for the units transferred to finished goods.
B.The change will increase the unit cost for the units transferred to finished goods.

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).

Would this be ethical? YES OR NOW?

-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).

Is this likely to be a successful strategy for affecting income over a long period of time? YES OR NO

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