Acc/561 Week 4 Production Cost Davis Skaros

MemoTo: Davis Skaros, Operations Manager From: NameCC:NameDate:27th Mar. 2018Re:Why production cost report showed 2,000 equivalent units Dear Sir,I appreciate your concern about the report that indicates that the production cost report shows only 2,000 equivalent units in ending inventory, while the cost is actually double the units indicated. This is a common misunderstanding between accountants and managers, which originates from the different cost accounting techniques. The figures expressed in the report are in equivalent units and not the actual units. Previous reports have indicated that the department has had a history of not keeping enough inventories on hand to meet demand. Therefore, during the accounting of inventory for the department, I considered the inventories that are partly used as part of the inventory that has actually been used (Weygandt, Kimmel & Kieso, 2015). This is motivated by the fact that the production process is continuous, and the inventory level is constantly reducing. Therefore, the actual inventory reported is lower than the inventory that is present in the warehouse. Production at the company can be viewed as batches, or a single order. Therefore, each batch is considered as a separate task. While accounting for the cost of production for the current