Carolwood Company manufactures widgets and uses process costing.The status of the beginning and ending inventory is: Direct materials are added to the manufacturing process in stages.None are added when production begins.Approximately 1/2 of the materials are added when the product is 25% complete.The other half is added when the product is 50% complete.
What percentage complete are beginning inventory and ending inventory with respect to direct materials DM and conversion costs CC?
A)beg.inventory: DM-50%, CC-30% end.inventory: DM-100%.CC-55%
B)beg.inventory: DM-50%.CC-30% end.inventory: DM-55%.CC-55%
C)beg.inventory: DM-30%.CC-30% end.inventory: DM-55%.CC-55%
D)beg.inventory: DM-50%.CC-70% end.inventory: DM-100%.CC-45%

Question

Carolwood Company manufactures widgets and uses process costing.The status of the beginning and ending inventory is:  Direct materials are added to the manufacturing process in stages.None are added when production begins.Approximately 1/2 of the materials are added when the product is 25% complete.The other half is added when the product is 50% complete.
What percentage complete are beginning inventory and ending inventory with respect to direct materials DM and conversion costs CC?
A)beg.inventory: DM-50%, CC-30% end.inventory: DM-100%.CC-55% 
B)beg.inventory: DM-50%.CC-30% end.inventory: DM-55%.CC-55% 
C)beg.inventory: DM-30%.CC-30% end.inventory: DM-55%.CC-55% 
D)beg.inventory: DM-50%.CC-70% end.inventory: DM-100%.CC-45%

Quizplus · Accepted Answer

The beginning inventory is 50% complete with direct materials and 30% complete with conversion costs because no materials are added when production begins, and approximately 1/2 of the materials are added when the product is 25% complete, so the beginning inventory is 50% complete with direct materials. Conversion costs are added uniformly throughout the production process, and since the beginning inventory was produced before the current period, it is only 30% complete with conversion costs.

The ending inventory is 100% complete with direct materials because all materials have been added, and 55% complete with conversion costs because the conversion costs are added uniformly throughout the production process, and the ending inventory is only 55% complete with those costs.

Carolwood Company Manufactures Widgets and Uses Process Costing