Question

Hoyt, Incorporated has a process costing system at its Forest Street Plant. All materials are introduced when conversion costs reach 40 percent. The following information is available for physical units during August: Units started in August 163,000 Units transferred out to Finishing Department in August 178,000 Work in process, August 1 (85% complete as to conversion costs) 41,000 Work in process, August 31 (25% complete as to conversion costs) 26,000 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 45 percent (from 25 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

          Hoyt, Incorporated has a process costing system at its Forest Street Plant. All materials are introduced when conversion costs reach 40 percent. The following information is available for physical units during August:

Units started in August 163,000
Units transferred out to Finishing Department in August 178,000
Work in process, August 1 (85% complete as to conversion costs) 41,000
Work in process, August 31 (25% complete as to conversion costs) 26,000

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 45 percent (from 25 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

Hoyt, Incorporated has a process costing system at its Forest Street Plant. All materials are introduced when conversion costs reach 40 percent. The following information is available for physical units during August:

Units started in August 163,000
Units transferred out to Finishing Department in August 178,000
Work in process, August 1 (85% complete as to conversion costs) 41,000
Work in process, August 31 (25% complete as to conversion costs) 26,000

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 45 percent (from 25 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

Added by Mariano W.

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