Aaron Company has a process costing system. All materials areintroduced when conversion costs reach 50 percent. The followinginformation is available for physical units during March.
| Work in process, March 1 (60% complete as to conversioncosts) | 150,000 |
| Units started in March | 600,000 |
| Units transferred to Finishing Department in March | 630,000 |
| Work in process, March 31 (40% complete as to conversioncosts) | 120,000 |
Required
Compute the equivalent units for materials costs and forconversion costs using the weighted-average method.
Compute the equivalent units for materials costs and forconversion costs using the FIFO method.
The company president has been under considerable pressure toincrease income. He tells the controller to change the estimatedcompletion for ending work in process to 60 percent (from 40percent).
What effect will this change have on the unit costs of unitstransferred to finished goods in March?
Would this be ethical?
Is this likely to be a successful strategy for affecting incomeover a long period of time?
