2. The Morgan Company uses the weighted-average method in its process costing sy

Question

2. The Morgan Company uses the weighted-average method in its process costing system. For a particular department, the company had 54,000 equivalent units with respect to conversion costs in March. There were 7,500 units in the department's beginning work in process inventory, two thirds complete with respect to conversion costs. During March, 52,500 units were started and 50,000 were completed and transferred out of the department. The ending work in process inventory in the department A. was 65% complete with respect to conversion costs. oro unH STN ? ly00

Explanation / Answer

Firstly, we need to calculated the ending work in process inventory which is shown a follows:

Beginning Work in process = 7,500 units

Started into production = 52,500 units

Total units = 7,500 units+52,500 units = 60,000 units

Units completed and transferred out of the department = 50,000 units

Ending work in process Inventory = Total units - Units completed

= 60,000 units - 50,000 units = 10,000 units

Equivalent units of March = (Units completed in March*100%)+(Ending WIP*Percent of completion)

54,000 units = (50,000 units*100%)+(10,000 units*Percent of completion)

   54,000 units = 50,000 units+(10,000 units*Percent of completion)

10,000 units*Percent of completion = 54,000 - 50,000 = 4,000 units

Percent of compeltion = 4,000/10,000 = 0.40 or 40%

Therefore ending work in process inventory was 40% complete with respect to conversion costs.

Hence the correct option is B) was 40% complete with respect to conversion costs.

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