1. The company sells and ships all units to customers as soon as they are comple
ID: 334658 • Letter: 1
Question
1. The company sells and ships all units to customers as soon as they are completed. Assume that an error is made in determining the percentage of completion for units in endings inventory. Instead of being 30% complete with respect to labor, they are actually 60% complete. Write an explanation to the plant manager describing how this error affects its November financial statement.
Victory Company uses weighted-average process costing to account for its production costs. Conversion cost is added evenly throughout the process. Direct materials are added at the beginning of the process. During November. the company transferred 700,000 units of product to finished goods. At the end of November, the work in process inventory consists of 180,000 units that are 30% complete with respect to conversion. Beginning inventory had $420,000 of direct materials and $139,000 of conversion cost The direct material cost added in November is $2.220,000, and the conversion cost added is $3.254,000 Beginning work in process consisted of 60,000 units that were 100% complete with respect to direct materials and 80% complete with respect to conversion. Of the units completed. 60.000 were from begin- ning work in process and 640.000 units were started and completed during the period.Explanation / Answer
Answer:
To ................................
Plant Manager
From : Your Name & Position
Date :
Re : Discripancy in Inventry Valuation
Sir. i want to addressing your attention to Financial statement of year ending, there are one error made in while preparing financial statement of the year ended which are affecting this year financial stament also will affect next year,
Valuation of percenatge of completion of inventry is issue in the financial statement , Valuation of % of completion of inventry is ........ taken intead of actual % completion inventry. that will impact to value of cost of good sold, WIP inventry, gross profit will arrived .......... intead of .......... that will also affect to Net profit with same amount and Tax Provision will be change and then Stament of Financial accounts will not give true and fair view.
Sir as per my opininon that error should be rectify so that financial statement will give true and fair view.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.