Majestic ltd, which uses a process-costing system, adds material at the beginning of production and incurs conversion costs evenly throughout manufacturing process. The following selected information was taken from the company's accounting records: Total equivalent units of materials: 5,000
Total equivalent units of conversion: 4,400
Units started and completed during the period: 3,500
On the basis of this information, the ending work-in-process inventory's stage of completion with respect to conversion cost is:

Question

Quizplus · Accepted Answer

The total equivalent units of conversion are 4,400, while the units completed during the period are 3,500. Thus, there are 900 equivalent units of conversion in ending work-in-process inventory. If the conversion costs are incurred evenly throughout the manufacturing process, the ending work-in-process inventory must be 60% complete (i.e., 900 divided by 1,500). Therefore, the best choice is B.

Majestic Ltd, Which Uses a Process-Costing System, Adds Material at the Beginning