Krispy & Co manufactures a single product that goes through two processes, mixing and cooking. The following data are for the mixing department for June. Work-in process inventory, June 1 25, 000 units Conversion 75% Work-in process inventory, June 30 15, 000 units Conversion 30% Units started into production 50,000 Units completed and transferred out ? Costs Work-in process inventory, June 1 Material A $ 70,500 Material B 90,250 Conversion 114,250 Cost added during June Material A 155,000 Material B 130,400 Conversion 306,500 Material A is added at the beginning of production process in the mixing department.

Material B is also added in the mixing department, but not until the units are 50% complete with regard to conversion. Conversion costs are incurred uniformly during the process. The Company uses weighted average cost method. Required: (i) Prepare a four step production cost report for Krispy & Co for the month of June. (Note: In your production report units and costs of materials A, B should be identified separately, round your $ values to 2 decimal places.) (ii) Assume that you are the company's controller. The mixing department's June unit cost is higher than standard cost. If the manager of the mixing department asks you to do him a favour by increasing the ending inventory completion percentage from 30 to 50 % to lower unit costs, what should you do and why? Explain using both the costing and pricing and ethical considerations.