BIG Manufacturing Products Has Been Using FIFO Process Costing for Tracking

question 59

Essay

BIG Manufacturing Products has been using FIFO process costing for tracking the costs of its manufacturing activities. However, in recent months, the system has become somewhat bogged down with details. It seems that, when the company purchased Brown Electronics last year, its product lines increased six-fold. This has caused both the accountants and the suppliers of the information, the line managers, great difficulty in keeping the costs of each product line separate. Likewise, the estimation of the completion of ending work-in-process inventories and the associated costs has become very cumbersome. The chief financial officer of the company is looking for ways to improve the reporting system of product costs.
Required:
What can you recommend to improve the situation?

---

Definitions:

Lean Environment

An operational setting focused on minimizing waste and maximizing efficiency, often via continuous improvement methodologies.

Process Problems

Issues or obstacles encountered in the execution or performance of a procedure or operation.

Traditional Environment

A setting or condition characterized by long-established practices and methods, often resistant to change.

Pull Manufacturing

A production strategy where work is initiated based on demand, aiming to minimize inventory levels and reduce waste by producing only what is needed at the right time.