Majesco, 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: 5,000
Total equivalent units of conversion: 4,400
Units started and completed during the period: 3,500
On the basis of this information, the ending work-in-process inventory's stage of completion is:
A) 40%.
B) 60%.
C) 70%.
D) 80%.
E) some other percentage not listed.

Question

Quizplus · Accepted Answer

The ending work-in-process inventory's stage of completion is calculated based on the equivalent units of conversion. Since 4,400 equivalent units of conversion were completed and 3,500 units were started and completed, the remaining 900 units (5,000 - 4,400) are in ending inventory. The stage of completion for these units is 900/1,500 (since 5,000 total units - 3,500 completed units = 1,500 units in ending inventory), which is 60%.

Majesco, Which Uses a Process-Costing System, Adds Material at the Beginning