Process and Hybrid Costing Systems Analysis
A: Units Accounted for:
| Quantity | Actual |
| Beginning inventory | 5,500 |
| Units added to the production | 94,500 |
| Total units accounted for | 100,000 |
Calculation of Equivalent Units of Production (Ending Inventory 40% Complete)
| Quantity | Actual | Percentage of completion | Equivalent units |
| Units transferred out | 90,000 | 100% | 100% × 90,000 = 90,000 |
| Ending inventory | 10,000 | 40% | 40% × 10,000 = 4,000 |
| Total equivalent units | 90,000 + 4,000 =94,000 | ||
| Equivalent cost per unit | $902,400 ÷ 94,000 = $9.6 | ||
B: Units Accounted for:
| Quantity | Actual |
| Beginning inventory | 5,500 |
| Units added to the production | 94,500 |
| Total units accounted for | 100,000 |
Calculation of Equivalent Units of Production (Ending Inventory 60% Complete)
| Quantity | Actual | Percentage of completion | Equivalent units |
| Units transferred out | 90,000 | 100% | 100% × 90,000 = 90,000 |
| Ending inventory | 10,000 | 60% | 60% × 10,000 = 6,000 |
| Total equivalent units | 90,000 + 6,000 = 96,000 | ||
| Equivalent cost per unit | $902,400 ÷ 96,000 = $9.4 | ||
C: Summary of Calculations and Findings
Equivalent units of production have been calculated above by considering that the ending inventory is complete by 40% and 60%, respectively. Notably, equivalent units of production express the amount of work done by a manufacturer on units of output that are partially completed at the end of a financial period (Pervan & Dropulić, 2020). From the calculations, equivalent units of production when inventory is 40% complete are 94,000, and the equivalent cost per unit is $9.6. When the completion percentage for the ending inventory is placed at 60%, the equivalent units of production increase to 96,000, while the equivalent cost per unit reduces to $9.4.
Mr. Sawyer’s Motives for Establishing the Percentage of Completion at 60 Percent Rather Than 40 Percent
When the findings above are well analyzed, Mr. Swayer’s motive to establish the percentage of completion at 60% instead of 40% can be ascertained. The case presents a target (standard) cost per unit of $9.45. The following findings are established when compared to the equivalent cost per unit under 40% and 60% levels of completion concerning ending inventory. First, the equivalent cost per unit of $9.6 is favorable compared to the target (standard) cost per unit. Second, the equivalent cost per unit of $9.4 is unfavorably compared to the target (standard) cost per unit. Accordingly, the motive of Mr. Sawyer has unacceptable motives for the proposals made. Notably, this is so because he intends to manipulate the ending inventory balances for personal interests, which does not reflect him well as the manager in charge of controlling costs. Manipulation of accounting figures is against the ethical code of conduct as it’s aimed at serving the personal interests of some stakeholders while misleading the users of accounting statements (Aren, Özer & Alpkan, 2002).
References
Aren, S., Özer, G., & Alpkan, L. (2002). Ethics of Manipulations in Accounting Decisions. The Economics & International Business Research Conference. Retrieved from https://www.researchgate.net/publication/263932548_Ethics_of_Manipulations_in_Accounting_Decisions
Pervan, I., & Dropulić, I. (2020). The influence of integrated information systems on the implementation of advanced managerial accounting techniques. Ekonomski Vjesnik, 33(2), 383-395.
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Question 
Refer to the scenario located in the “Analyze, Think, Communicate” section 12-5 of Ch. 12, “Job-Order, Process, and Hybrid Costing Systems” of Fundamental Managerial Accounting Concepts. This scenario involves an altercation between Rene Alverez and Bill Sawyer and requires you to weigh in with calculations and comments on the matter.
Process and Hybrid Costing Systems Analysis
Read the scenario in the textbook and complete the activity below.
Compute the equivalent cost per unit, assuming the ending inventory is considered to be 40 percent complete.
Compute the equivalent cost per unit, assuming the ending inventory is considered to be 60 percent complete.
Write a 350-word summary of your calculations and findings. Comment on Mr. Sawyer’s motives for establishing the percentage of completion at 60 percent rather than 40 percent.