en promoted to production manager. He has iu promot 12 David Skaros has recently
ID: 2335625 • Letter: E
Question
en promoted to production manager. He has iu promot 12 David Skaros has recently started to receive v production cost report that arious managerial reports, including the production eu prepared. It showed that his departiment h cluding the productio n ending inven- had a history of not keeping enough inventory on hand to meer demand He has come to you, very angry a wants to know why you credited him ly 2,00 units when he knows he had at least twice that many on hand nstructions hanr piain o him why his production cost report showed only 2,000 equivalent units in ending inventory. Write an informal memo. Be kind and explain very clearly why he is mistaken. Colloing pro duction andExplanation / Answer
MEMO:
To:David Skaros
From:Mr.X(if you want substitute your name)
Date:10-01-2018
Sub: Memorandum for why less units shown as ending Inventory.
Here,the equivalent units shown is 2000 units but not the actual ending units in the process.This is because they are not actual units but equivalent units.Equivalent units are those units which are in production and represented as fully completed portion upto the percentage of work completed. Hence they will be less than actual units in production.Here, there will be no problem for you regarding less ending units in progress as percentage of work completed through which the equivalent units attained is sufficiently disclosed.
Yours Sincerely,
Mr.X
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