Production Costs
Purpose of Assignment
The materials covered this week distinguish between the different costing methods and provides needed tools for decision making. This case study focuses on determining equivalent units in a production business setting.
Assignment Steps
Resources: Generally Accepted Accounting Principles (GAAP), U.S. Securities and Exchange Committee (SEC)
Scenario: Davis Skaros has recently been promoted to production manager. He has just started to receive various managerial reports, including the production cost report you prepared. It showed his department had 2,000 equivalent units in ending inventory. His department has had a history of not keeping enough inventory on hand to meet demand. He has come to you, very angry, and wants to know why you credited him with only 2,000 units when he knows he had at least twice that many on hand.
Prepare a maximum 700-word informal memo and explain to Mr. Skaros why his production cost report showed only 2,000 equivalent units in ending inventory. Using a professional tone, explain to him clearly why your report is accurate.
Format the assignment consistent with APA guidelines.
answer preview
There are two methods for inventory administration and reporting and this is the reason for the conflict in reporting of the inventory for your department. In fact, the conflict is as a result of the method used to prepare the report. There are two methods through which ending inventory can be measured but before going into details it is important to appreciate the role of inventory administration. Inventory administration refers to a standardized way of obtaining, recording and taking care of business inventory. The inventory management department decides what needs to be purchased, the quantity of inventory to be purchased, the supplier of the inventory and how to store the purchased inventory………………………….words 737