The final processing dept in Mary's production facility began the year with no work in process inventories. During the year, 210,000 units were transferred infromthe prior processing department and 200,000 units were completed and sold. Costs transferred in from the prior department totaled $39,375,000. No materials are added in the final processing department. A total of $20,807,500 of conversion cost was incurred in the final processing department during the year.
1. It is estimated that the units in ending inventory in the final processing department were 30% complete with respect to the conversion costs of the final procssing dept. Is the estimate of the percentage completion is used, what would be the Cost of Goods Sold for the year?
2. What percentage completion would result in increasing reported net operating income by $200,000 over the net operating income that would be reported if the 30% figure were used?
Excel file contains valuation of inventory using Weighted Average Method and calculations of cost of goods sold.