Companies often find that they have partially completed units in their beginning and/or ending inventories. Rather than completely disregarding their existence or including the entirety of cost in their accounting, companies will sometimes assess the degree of completion for both Direct Materials (DM) and Conversion Costs (CC) as of the reporting date. This will eventually lead to the calculation of equivalent units that have been completed. Of the following choices, who would be the person or party most likely to provide reliable input for this process to management?
A) A new manager that insists upon using industry trends rather than historical company data
B) An operations team member who has been observing the production operation during factory hours on a regular basis
C) The top-selling sales staff member in the company
D) Third parties, such as vendors who are in the process of bidding for a contract with the organization

Question

Quizplus · Accepted Answer

Answer the question from the perspective of a manager. Of the choices provided, an operations team member would be the most reliable party to speak with. Of the choices provided, it is the only one that draws from someone of something directly involved in the costing process.

Companies Often Find That They Have Partially Completed Units in Their