The Journey Company operates under a process cost system using the weighted average method. All direct materials are added at the beginning of production in the department, and conversion costs are incurred evenly throughout production. Inspection occurs when production is 100% completed.
Following are data for January. All unfinished work at the end of January is 30% completed. The beginning inventory is 80% completed.

a)Following a material flow analysis, the company's accountant estimates that 10% of the direct materials and 75% of conversion costs are classified as "waste and emissions." Assume these percentages apply to both beginning inventories and current period costs.
Prepare a material flow cost report using the Weighted Average method.
b)Provide a possible explanation for the higher proportion of waste in conversion costs compared to direct materials.
c)Should the managers of Rally Company establish a goal of eliminating all waste and emissions?
Explain your reasoning.
d)Suppose the managers are interested in presenting Rally as a company that is concerned about the environment. What are the pros and cons of publicly reporting data about the amount of waste in the company's manufacturing operations?

Question

The Journey Company operates under a process cost system using the weighted average method. All direct materials are added at the beginning of production in the department, and conversion costs are incurred evenly throughout production. Inspection occurs when production is 100% completed.
Following are data for January. All unfinished work at the end of January is 30% completed. The beginning inventory is 80% completed.
  
a)Following a material flow analysis, the company's accountant estimates that 10% of the direct materials and 75% of conversion costs are classified as "waste and emissions." Assume these percentages apply to both beginning inventories and current period costs.
Prepare a material flow cost report using the Weighted Average method.
b)Provide a possible explanation for the higher proportion of waste in conversion costs compared to direct materials.
c)Should the managers of Rally Company establish a goal of eliminating all waste and emissions?
Explain your reasoning.
d)Suppose the managers are interested in presenting Rally as a company that is concerned about the environment. What are the pros and cons of publicly reporting data about the amount of waste in the company's manufacturing operations?

Quizplus · Accepted Answer

The Answer of The Journey Company operates under a process cost system using the weighted average method. All direct materials are added at the beginning of production in the department, and conversion costs are incurred evenly throughout production. Inspection occurs when production is 100% completed.
Following are data for January. All unfinished work at the end of January is 30% completed. The beginning inventory is 80% completed.
  
a)Following a material flow analysis, the company's accountant estimates that 10% of the direct materials and 75% of conversion costs are classified as "waste and emissions." Assume these percentages apply to both beginning inventories and current period costs.
Prepare a material flow cost report using the Weighted Average method.
b)Provide a possible explanation for the higher proportion of waste in conversion costs compared to direct materials.
c)Should the managers of Rally Company establish a goal of eliminating all waste and emissions?
Explain your reasoning.
d)Suppose the managers are interested in presenting Rally as a company that is concerned about the environment. What are the pros and cons of publicly reporting data about the amount of waste in the company's manufacturing operations?

The Journey Company Operates Under a Process Cost System Using