Maple Leaf Coffee Company has a beginning Work-in-Progress (WIP) Inventory of 4,000 units, and its degree of completion was 100% for Direct Materials (DM) and 80% for Conversion Costs (CC). During the period, Maple started 16,000 units and a total of 18,000 units were completed and removed from WIP Inventory. The ending Inventory of WIP was 2,000 units with a degree of completion as 100% of Direct Materials. The company uses the First-In, First-Out (FIFO) method, and the total equivalent units of Conversion Costs for the period was 16,000 units. Find the degree of completion for Conversion Costs of ending WIP Inventory.
A) 30%
B) 40%
C) 60%
D) 70%

Question

Quizplus · Accepted Answer

Under the FIFO Method, Total Equivalent Units of Conversion Cost = (Units in Beginning WIP Inventory × Percentage of Resource Added this Period) + (Units Started and Completed this Period × Percentage of Resource Added this Period) + (Units in Ending WIP Inventory × Percentage of Resource Added this Period).
Therefore, 16,000 units = (4,000 units × 20%) + (14,000 units × 100%) + (2,000 units × X%)
(2,000 × X%) = 16,000 units - 800 units - 14,000 units
X = 60%

Maple Leaf Coffee Company Has a Beginning Work-In-Progress (WIP) Inventory