Muhares,which uses a process-costing system,adds material at the beginning of production and incurs conversion cost evenly throughout manufacturing.The following selected information was taken from the company's accounting records:
Total equivalent units of materials: 8,000
Total equivalent units of conversion: 7,400
Units started and completed during the period: 6,500
On the basis of this information,the ending work-in-process inventory's stage of completion is:
A)80%.
B)70%.
C)60%.
D)40%.
E)some other percentage not listed abovE.

Question

Quizplus · Accepted Answer

The ending work-in-process units can be calculated as follows:
Ending work-in-process units = Total equivalent units - Units started and completed during the period
= (8,000 + 7,400) - 6,500
= 8,900
Since the conversion cost is incurred evenly throughout manufacturing, the ending work-in-process inventory's stage of completion of conversion cost is the percentage of conversion cost incurred on the ending work-in-process units. This can be calculated as follows:
Conversion cost incurred on ending work-in-process units = 7,400/8,900 x 100%
= 83.15%
Therefore, the ending work-in-process inventory's stage of completion is approximately 83%, which is closest to choice C (60%).

Muhares,which Uses a Process-Costing System,adds Material at the Beginning of Production