8-21: Compute Equivalent UnitsEthical Issues contd 1.The change
will reduce the unit cost for the units transferred to finished
goods. $$$/(larger EUs)=smaller unit cost Larger % completion means
higher EI cost 2.It is not ethical; there is no reason to believe
the change reflects anything other than a desire for reporting
better results. What is violated in IMA Code?? (p. 23) 3.It is
unlikely to be successful for long. An accounting system keeps
track of actual costs. If a manager postpones reporting them this
period, they will be reported next period or shortly
thereafter.
Slide 5
Institute of Management Accountants Code of Ethics
CompetenceConfidentiality IntegrityCredibility
Slide 6
Competence Members have a responsibility to: 1.Maintain an
appropriate level of professional expertise by continually
developing knowledge and skills. 2.Perform professional duties in
accordance with relevant laws, regulations, and technical
standards. 3.Provide decision support information and
recommendations that are accurate, clear, concise, and timely.
4.Recognize and communicate professional limitations or other
constraints that would preclude responsible judgment or successful
performance of activity.
Slide 7
Confidentiality Members have a responsibility to: 1.Keep
information confidential except when disclosure is authorized or
legally required. 2.Inform all relevant parties regarding
appropriate use of confidential information. 3.Refrain from using
confidential information for unethical or illegal advantage.
4.Monitor subordinates activities to ensure compliance.
Slide 8
Integrity Members have a responsibility to: 1.Mitigate actual
conflicts of interest, regularly communicate with business
associates to avoid apparent conflicts of interest. Advise all
parties of any potential conflicts. 2.Refrain from engaging in any
conduct that wouldprejudice carrying out duties ethically.
3.Abstain from engaging in or supporting any activity that might
discredit the profession.
Slide 9
Credibility Members have a responsibility to: 1.Communicate
information fairly and objectively. 2.Disclose all relevant
information that could reasonably be expected to influence an
intended users understanding of the reports, analyses, or
recommendations. 3.Disclose delays or deficiencies in information,
timeliness, processing, or internal controls in conformance with
organization policy and/or applicable law.
Slide 10
8-21 concluded 3. It is unlikely to be successful for long. An
accounting system keeps track of actual costs. If a manager
postpones reporting them this period, they will be reported next
period or shortly thereafter.
Slide 11
Pr. 8-36 Steps 1 & 2
Slide 12
Pr. 8-36 Steps 3 & 4
Slide 13
Pr. 8-36 Step 5: Assign the costs
Slide 14
Pr. 3-42: Douglas Toys
Slide 15
Slide 16
Slide 17
Pr. 8-52: Operation Costing
Slide 18
8-52 contd These costs, plus the cost of material, make up the
cost of units completed and the ending inventories of WIP. See next
slide
Slide 19
8-52 contd Product Material Cost Number of Units Unit Material
Cost Rookie$18,000600=$ 30 Novice17,280480=36 Hiker13,050290=45
Expert11,250150=75 The material costs per unit are: Product Unit
Material Cost Stitching Department Unit Cost Customizing Department
Unit Cost Unit Cost Rookie$30+$ 42+$ 0= $ 72 Novice36+42+36=114
Hiker45+42+36=123 Expert75+42+36= 153 Cost of units transferred to
finished goods:
Slide 20
8-52 contd Material costNumber of Units Unit Cost Total Cost
Rookie60 $30$ 1,800 Novice30 361,080 Hiker20 45900 Expert30 752,250
Total material cost $ 6,030 Conversion costs 56* 422,352 Total $
8,382 Work-in-Process Ending Inventory, Stitching. * 140 units, 40%
complete
Slide 21
Pr. 52 concluded Material costNumber of Units Unit Cost Total
Cost Novice10 $36360 Hiker20 45900 Expert20 751,500 Total material
cost $ 2,760 Conversion costs From Stitching 50 422,100 From
Customizing 10* 36360 Total conversion costs $2,460 Total $ 5,220
Customizing Department:. * 50 units, 20% complete
Slide 22
Comments on 8-52 The problem is a little odd in that there are
two process-costing-type departments and no job costing department.
It seems that the Customizing department would take a job-costing
approach. It might perform truly custom work on the different
models, such as adding custom designs or corporate trademarks, etc.
If so, individual jobs would be tracked in the Customizing
department for truly custom work.