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.

Question

Quizplus · Accepted Answer

Since the ending work-in-process inventory is only 60% complete with respect to materials, we only need to focus on the conversion costs. The total dollar value of the inventory is $38,000, which means that the total cost of the inventory is as follows:

Total cost = Cost per equivalent unit x Number of equivalent units
Total cost = $4.00 x Number of equivalent units
$38,000 = $4.00 x Number of equivalent units
Number of equivalent units = 9,500

This means that there are 9,500 equivalent units of conversion costs in the ending work-in-process inventory. To find the percentage completion, we can use the following formula:

Percentage completion = (Number of equivalent units completed / Total number of equivalent units) x 100%

Percentage completion = (9,500 / 10,000) x 100%
Percentage completion = 95%

Therefore, the ending work-in-process inventory is 95% complete with respect to conversion costs. The closest answer choice is B, which is 20% complete, so that is the best choice.

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