Reference no: EM132639435

René 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 transferred out of his work in Process Inventory account has declined. His ability to control cost is highly valued, and it is widely believed that he will be the successorto 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 although she believed she was right, she did not know how to support her position.

Problem 1: Compute the equivalent cost per unit, assuming the ending inventory is considered to be 40 percent complete.

Problem 2: Compute the equivalent cost per unit, assuming the ending inventory is considered to be 60 percent complete.