A company produces various products using Process manufacturing.
The manufacturer makes two co-products from a formula and rarely produces the primary formula item.
The costs of making the co-products are inflated.
The manufacturer must update the costs of producing the co-products and change the formula to not produce the primary formula item.
You need to change the primary formula item type.
What should you do?
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A. B. C. D.B.
To change the primary formula item type for a company that produces various products using process manufacturing, the following steps need to be followed:
Step 1: Review the co-products and their costs The manufacturer makes two co-products from a formula and rarely produces the primary formula item. The first step would be to review the co-products and their costs. The costs of making the co-products are inflated. So, it is necessary to update the costs of producing the co-products.
Step 2: Update the costs of producing the co-products To update the costs of producing the co-products, the costs need to be associated with the items. So, answer option A, "Associate the costs to produce by-products with the items" is the correct answer for this step.
Step 3: Change the formula to not produce the primary formula item The next step is to change the formula to not produce the primary formula item. To do this, the primary formula item type needs to be changed. Answer option B, "Change the primary formula item to use the planning item type" is the correct answer for this step.
Step 4: Change the cost of the primary formula item and recalculate the item cost After changing the primary formula item type, the cost of the primary formula item needs to be changed to zero. Then, the item cost needs to be recalculated. Answer option C, "Change the cost of the primary formula item to zero and then recalculate the item cost" is the correct answer for this step.
Step 5: Change the production type and recalculate the item cost Finally, the production type needs to be changed to Bill of Materials, and the item cost needs to be recalculated. Answer option D, "Change the production type to Bill of materials and recalculate the item cost" is the correct answer for this step.
In conclusion, the correct steps to change the primary formula item type for a company that produces various products using process manufacturing are: