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    Equivalent units

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    Larry Lair has recently been promoted to production manager, and so he has just started to receive various managerial reports. One of the reports he has received is the production cost report that you prepared. It showed that his department had 1,000 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 1,000 units when he knows he had a least twice that many on hand.

    Explain to him why his production cost report showed only 1,000 equivalent units in ending inventory. Write an informational memo. Be kind and explain very clearly why he is mistaken.

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    Solution Preview

    Giventhe nature of production processsome units may remain incomplete at athe time of accounting for the total cost of production and the ending inventory. In such a situaiton some units are complete while otheres are incompleted partially incomplete. For the cost ...

    Solution Summary

    This explains the calculation of Equivalent units

    $2.19

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