Mary Mahr

Solution Guide

E3-9 Mary Mahr has recently been promoted to production manager, and so she has

just started to receive various managerial reports. One of the reports she has received is

the production cost report that you prepared. It showed that her department had 1,000

equivalent units in ending inventory. Her department has had a history of not keeping

enough inventory on hand to meet demand. She has come to you, very angry, and wants

to know why you credited her with only 1,000 units when she knows she had at least

twice that many on hand.

Instructions

Explain to her why her production cost report showed only 1,000 equivalent

units in ending inventory. Write an informal memo. Be kind and explain very clearly why

she is mistaken.