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P R 321 Lecture Notes - Lecture 5: West Des Moines, Iowa

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School
Iowa State University
Department
Public Relations
Course
P R 321
Professor
Christine Jensen

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Document Summary

Last year, i attended valley high school in west des. Like many of you, i could not wait for my senior prom. On prom night, my date decided to bring a flask. In the span of just a few hours, my date had drank his entire flask and was extremely tipsy. As prom night drew to a close, many of my friends offered my date and i to come over to their house afterwards. As the last song of the night played, i told my date that he would be unable to drive us to the after party and that we should call a cab. I didn"t want to call our parents and get into trouble. He told me that i did not know what i was talking about and proceeded to get in the driver"s seat of the car when we left the event.

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Related Questions

Gary Stevens and Mary James are production managers in the Consumer Electronics Division of General Electronics Company, which has several dozen plants scattered in locations throughout the world. Mary manages the plant located in Des Moines, Iowa, while Gary manages the plant in El Segundo, California. Production managers are paid a salary and get an additional bonus equal to 10% of their base salary if the entire division meets or exceeds its target profits for the year. The bonus is determined in March after the company’s annual report has been prepared and issued to stockholders.
Shortly after the beginning of the new year, Mary received a phone call from Gary that went like this:

Gary: How’s it going, Mary?
Mary: Fine, Gary. How’s it going with you?
Gary:

Great! I just got the preliminary profit figures for the division for last year and we are within $75,680 of making the year’s target profits. All we have to do is pull a few strings, and we’ll be over the top!
Mary: What do you mean?
Gary: Well, one thing that would be easy to change is your estimate of the percentage completion of your ending work in process inventories.
Mary:

I don’t know if I can do that, Gary. Those percentage completion figures are supplied by Tom Winthrop, my lead supervisor, who I have always trusted to provide us with good estimates. Besides, I have already sent the percentage completion figures to corporate headquarters.
Gary:

You can always tell them there was a mistake. Think about it, Mary. All of us managers are doing as much as we can to pull this bonus out of the hat. You may not want the bonus check, but the rest of us sure could use it.

The final processing department in Mary’s production facility began the year with no work in process inventories. During the year, 380,000 units were transferred in from the prior processing department and 344,000 units were completed and sold. Costs transferred in from the prior department totaled $104,500,000. No materials are added in the final processing department. A total of $25,769,000 of conversion cost was incurred in the final processing department during the year.

What percentage completion would result in increasing reported net operating income by $75,680 over the net operating income that would be reported if the 25% figure were used? (Do not round your cost per unit calculations. Round your intermediate calculations to the nearest dollar amount and final answer to the nearest whole percent.)

percentage completion _______%

CASE 4–20 Ethics and the Manager, Understanding the Impact of Percentage Completion on Profit—Weighted-Average Method [Course Objective B] Gary Stevens and Mary James are production managers in the Consumer Electronics Division of General Electronics Company, which has several dozen plants scattered in locations throughout the world. Mary manages the plant located in Des Moines, Iowa, while Gary manages the plant in El Segundo, California. Production managers are paid a salary and get an additional bonus equal to 5% of their base salary if the entire division meets or exceeds its target profits for the year. The bonus is determined in March after the company’s annual report has been prepared and issued to stockholders.

Shortly after the beginning of the New Year, Mary received a phone call from Gary that went like this:

Gary: How’s it going, Mary?

Mary: Fine, Gary. How’s it going with you?

Gary: Great! I just got the preliminary profit figures for the division for last year and we are within $200,000 of making the year’s target profits. All we have to do is pull a few strings, and we’ll be over the top!

Mary: What do you mean? Gary: Well, one thing that would be easy to change is your estimate of the percentage completion of your ending work in process inventories. Mary: I don’t know if I can do that, Gary. Those percentage completion figures are supplied by Tom

Winthrop, my lead supervisor, who I have always trusted to provide us with good estimates.

Besides, I have already sent the percentage completion figures to corporate headquarters. Gary: You can always tell them there was a mistake. Think about it, Mary. All of us managers are doing as much as we can to pull this bonus out of the hat. You may not want the bonus check, but the rest of us sure could use it.

The final processing department in Mary’s production facility began the year with no work in process inventories. During the year, 210,000 units were transferred in from the prior processing department and 200,000 units were completed and sold. Costs transferred in from the prior department totaled $39,375,000. No materials are added in the final processing department. A total of $20,807,500 of conversion cost was incurred in the final processing department during the year.

Required:

1. Tom Winthrop estimated that the units in ending inventory in the final processing department were 30% complete with respect to the conversion costs of the final processing department. If this estimate of the percentage completion is used, what would be the Cost of Goods Sold for the year? (Note: Since all units completed were sold, the cost of goods transferred out = Cost of Goods Sold.)

2. Gary is recommending that the completion percentage by adjusted by 15 percentage points in order to assist the team in making their bonus.

a. Calculate the cost of goods sold if the ending inventory is 15% complete in regard to conversion costs. Would net income increase or decrease if this option was chosen over the 30% completion percentage? How much is the increase?

b. Calculate the cost of goods sold if the ending inventory is 45% complete in regard to conversion costs. Would net income increase or decrease if this option was chosen over the 30% completion percentage? How much is the increase?

c. Based on your calculations, which percentage is Gary suggesting that Mary use for her ending inventory calculations.

Gary Stevens and Mary James are production managers in theConsumer Electronics Division of General Electronics Company, whichhas several dozen plants scattered in locations throughout theworld. Mary manages the plant located in Des Moines, Iowa, whileGary manages the plant in El Segundo, California. Productionmanagers are paid a salary and get an additional bonus equal to 5%of their base salary if the entire division meets or exceeds itstarget profits for the year. The bonus is determined in March afterthe company’s annual report has been prepared and issued tostockholders. Shortly after the beginning of the new year, Maryreceived a phone call from Gary that went like this: Gary: How’s itgoing, Mary? Mary: Fine, Gary. How’s it going with you? Gary:Great! I just got the preliminary profit figures for the divisionfor last year and we are within $200,000 of making the year’starget profits. All we have to do is pull a few strings, and we’llbe over the top! Mary: What do you mean? Gary: Well, one thing thatwould be easy to change is your estimate of the percentagecompletion of your ending work in process inventories. Mary: Idon’t know if I can do that, Gary. Those percentage completionfigures are supplied by Tom Winthrop, my lead supervisor, who Ihave always trusted to provide us with good estimates. Besides, Ihave already sent the percentage completion figures to corporateheadquarters. Gary: You can always tell them there was a mistake.Think about it, Mary. All of us managers are doing as much as wecan to pull this bonus out of the hat. You may not want the bonuscheck, but the rest of us sure could use it. The final processingdepartment in Mary’s production facility began the year with nowork in process inventories. During the year, 210,000 units weretransferred in from the prior processing department and 200,000units were completed and sold. Costs transferred in from the priordepartment totaled $39,375,000. No materials are added in the finalprocessing department. A total of $20,807,500 of conversion costwas incurred in the final processing department during the year.Required: 1. Tom Winthrop estimated that the units in endinginventory in the final processing department were 30% complete withrespect to the conversion costs of the final processing department.If this estimate of the percentage completion is used, what wouldbe the Cost of Goods Sold for the year? (Do not round intermediatecalculations.) 2. Does Gary Stevens want the estimated percentagecompletion to be increased or decreased? Increased Decreased 3.What percentage completion would result in increasing reported netoperating income by $200,000 over the net operating income thatwould be reported if the 30% figure were used? (Do not roundintermediate calculations.)