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

question 17

Multiple Choice

Majestic ltd, which uses a process-costing system, adds material at the beginning of production and incurs conversion costs evenly throughout manufacturing process. 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 with respect to conversion cost is:

• A)40%.
• B)60%.
• C)70%.
• D)80%.
• E)100%.

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Definitions:

TC

Total Cost, which refers to the aggregate amount of expenses incurred by a business in producing goods or services.

AVC

Average Variable Cost, the total variable costs divided by the quantity of output produced, representing the variable cost per unit of output.

ATC

Average Total Cost, the total cost of production divided by the quantity of output produced.

Economic Profits

The surplus that remains after all operational costs, including opportunity costs, are subtracted from total revenues.