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Memo To Davis Skaros

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Accounting
School
University of Phoenix
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Homework
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Running head: MEMO TO DAVIS SKAROS
Memo to Davis Skaros
Name
Institution Affiliation

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MEMO TO DAVIS SKAROS 2
Memo to Davis Skaros
First and foremost, I would like to thank you for taking the time to peruse the production
cost report. Your query regarding the 2,000 equivalent units in ending inventory shows interest
in the operations of the company. The dynamics of your position and the activities in your
department necessitates that you ensure the stock and production is credible, reliable, and
accurate. Thus, I assure you that the production cost report captures all details in their true form.
However, to make sure you synthesize the information therein, this memo will demonstrate what
is meant by an equivalent unit of production and how the production cost report is prepared.
Usually, managerial and cost accountants must utilize the equivalent units of production
to assign costs to items that have been manufactured. It is a phrase that is employed to the work-
in-progress inventory reported at the end of an accounting period. Thus, an equivalent unit of
production shows the amount of work that has been done by producers based on the units that
they have partially finished at the end of an accounting period (Shepherd, 2016). It captures both
partially completed and fully completed units whereby they are all considered to be fully
finished. Therefore, it is a representation of the number of completed units that are theoretically
expected to be produced using the available direct labor, direct materials, and overhead costs
used in the period when the commodities were incomplete.
Mathematically, equivalent units of production can be captured as follows; the production
can start and complete 1,000 units. Equally, it can have 100 units that were stared but were only
40% complete. Therefore, the equivalent units of production herein are (1,000 + 40= 1,040).
Notably, it includes 1,000 completed units and 40% of 100 units that were partially finished. The
explanation herein provides an idea of what is expected at the end of each accounting period.

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Running head: MEMO TO DAVIS SKAROS Memo to Davis Skaros Name Institution Affiliation MEMO TO DAVIS SKAROS 2 Memo to Davis Skaros First and foremost, I would like to thank you for taking the time to peruse the production cost report. Your query regarding the 2,000 equivalent units in ending inventory shows interest in the operations of the company. The dynamics of your position and the activities in your department necessitates that you ensure the stock and production is credible, reliable, and accurate. Thus, I assure you that the production cost report captures all details in their true form. However, to make sure you synthesize the information therein, this memo will demonstrate what is meant by an equivalent unit of production and how the production cost report is prepared. Usually, managerial and cost accountants must utilize the equivalent units of production to assign costs to items that have been manufactured. It is a phrase that is employed to the workin-progress inventory reported at the end of an accounting period. Thus, an equivalent unit of production shows the amount of work that has been done by producers based on the units that they have partially finished at the end of an accounting period (Shepherd, 2016). It captures both partially completed and fully completed units whereby they are all considered to be fully finished. Therefore, it is a representation of the number of completed units that are theoretically expected to be produced using the available d ...
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