Anthony Martinez Case 4-20.pdf - Anthony Martinez Case 4-20 1 Cost of Goods Sold Units completed and sold Ending work in process Finished 10,000 units

# Anthony Martinez Case 4-20.pdf - Anthony Martinez Case 4-20...

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Anthony Martinez Case 4-20 1. Cost of Goods Sold Finished Conversion Units completed and sold 200,000 200,000 Ending work in process: Finished: 10,000 units × 100% + 10,000 Conversion: 10,000 units × 30% + 3,000 Equivalent units of production = 210,000 = 203,000 Finished Conversion Cost of beginning work in process \$ 0 \$0 Cost added during the period + 39,375,000 + 20,807,500 Total cost = \$39,375,000 =\$20,807,500 Equivalent units of production / 210,000 / 203,000 Cost per equivalent unit = \$187.50 =\$102.50 Cost of goods sold = 200,000 units × (\$187.50 Cost per equivalent unit + \$102.50 Cost per equivalent unit) = \$58,000,000 2. Gary Stevens wants the estimated percentage to be increased. The higher the percentage of

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Unformatted text preview: completion, the higher the equivalent units, which lowers the unit costs. 3. Increasing the percentage of completion may increase net operating income if the cost of goods sold is reduced. The cost of goods sold would have to be cut by \$200,000 so that the net operating income would increase by \$200,000. 4. Mary is being peer pressured and I think she shouldn’t do it. This is very untruthful as this is immoral probably by almost any standard. The “lying” excuse may or may not work but I don’t think it is just worth it....
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• Fall '19
• Generally Accepted Accounting Principles, Goods Sold, Conversion of units

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