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(Solved): Laredo Leather Companys production manager has been under pressure from the company president to ...



Laredo Leather Company’s production manager has been under pressure from the company president to reduce the cost of conversion. In spite of several attempts to reduce conversion costs, they have remained more or less constant. Now the production manager is faced with an upcoming meeting with the company president, at which the failure to reduce conversion costs will be on the agenda. The production manager has approached a colleague and close friend, who happens to be the corporate controller, with the following proposal. "There is no way to reduce the material cost, so I have to lower the conversion cost. If I can show just a little progress in next week's meeting, then I can buy a little time to try some other cost-cutting measures I've been considering. I want you to do me a favor. If we raise the percentage of completion of October's inventory to 60 percent, that will increase the number of equivalent units. Then the unit conversion cost will be a little lower."



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