Strap Company uses the weighted-average method in its process costing system.The company has only one processing department.The ending work-in-process inventory consists of 10,000 units,60% complete with respect to materials.The total dollar value of this inventory is $38,000.The costs per equivalent unit are $5.00 for materials and $4.00 for conversion costs for the period.With respect to conversion costs,what is the ending work-in-process inventory?
A) 10% complete.
B) 20% complete.
C) 38% complete.
D) 30% complete.(38,000 - 30,000)/$4/EU = 2,000 EU for conversion costs therefore 2,000/10,000 = 20% complete

Question

Quizplus · Accepted Answer

The ending work-in-process inventory is 60% complete with respect to materials, but the question is asking about conversion costs. To calculate the equivalent units for conversion costs, we need to use the total cost of the ending work-in-process inventory ($38,000) and subtract out the cost of materials in the inventory ($5.00 per EU x 10,000 EU x 60% complete = $30,000). This leaves us with $8,000 in costs for conversion, which we then divide by the cost per equivalent unit for conversion costs ($4.00). This results in 2,000 equivalent units for conversion costs. To determine the percentage complete for conversion costs, we divide the equivalent units for conversion costs (2,000 EU) by the total units in ending work-in-process inventory (10,000 units), which gives us 20% complete. Therefore, the correct answer is choice B.

Strap Company Uses the Weighted-Average Method in Its Process Costing