Rene Alverez knew she was in over her head soon after she took the job. Even so, the opportunity for promotion comes along rarely and she believed that she would grow into it. Ms. Alverez is the cost accounting specialist assigned to the finishing department of Standard Tool Company. Bill Sawyer, the manager of the finishing department, knows exactly what he is doing. In each of the three years he has managed the department, the cost per unit of product transsferred out of his Work in Process Inventory account has declined. His ability to control cost if highly valued, and it is widely believed that he will be the successor to the plant manager, who is being promoted to manufacturing vice president. One more good year would surely seal the deal for Mr. Sawyer. It was little wonder that Ms. Alverez was uncomfortable in challenging Mr, Sawyer’s estimate of the percentage of completion of the department’s ending inventory.He contended that the inventory was 60 percent complete, but she believed that it was only about 40 percent complete. After a brief altercation, Ms. Alverez agreed to sign off on Mr. Sawyer’s estimate. The truth was that she believed she was right, but she did not know how to support her position. Besides, Mr. Sawyer was about to be named the plant manager, and she felt it unwise to challenge such an important person. The department had beginning inventory of 5,500 unit of product and it started 94,500 units during the period. It transferred out 90,000 units during the period. Total transferred-in and production cost for the period was $902,400. This amount included the cost in beginning inventory plus additional cost incurred during the period. The target (standard) cost per unit is $9.45. Did Ms. Alverez violate any of the standards of ethical professional practice? (IMA Statement of Ethical Professional Practice)

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter8: Standard Costs And Variances

Section: Chapter Questions

Problem 2EB: Salley is developing material and labor standards for her company. She finds that it costs $0.55 per...

See similar textbooks

Related questions

Question

Rene Alverez knew she was in over her head soon after she took the job. Even so, the opportunity for promotion comes along rarely and she believed that she would grow into it. Ms. Alverez is the cost accounting specialist assigned to the finishing department of Standard Tool Company. Bill Sawyer, the manager of the finishing department, knows exactly what he is doing. In each of the three years he has managed the department, the cost per unit of product transsferred out of his Work in Process Inventory account has declined. His ability to control cost if highly valued, and it is widely believed that he will be the successor to the plant manager, who is being promoted to manufacturing vice president. One more good year would surely seal the deal for Mr. Sawyer. It was little wonder that Ms. Alverez was uncomfortable in challenging Mr, Sawyer’s estimate of the percentage of completion of the department’s ending inventory.He contended that the inventory was 60 percent complete, but she believed that it was only about 40 percent complete. After a brief altercation, Ms. Alverez agreed to sign off on Mr. Sawyer’s estimate. The truth was that she believed she was right, but she did not know how to support her position. Besides, Mr. Sawyer was about to be named the plant manager, and she felt it unwise to challenge such an important person. The department had beginning inventory of 5,500 unit of product and it started 94,500 units during the period. It transferred out 90,000 units during the period. Total transferred-in and production cost for the period was $902,400. This amount included the cost in beginning inventory plus additional cost incurred during the period. The target (standard) cost per unit is $9.45. Did Ms. Alverez violate any of the standards of ethical professional practice? (IMA Statement of Ethical Professional Practice)

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here