Jaunty Coffee Company has 1,000 units in beginning work-in-process inventory that are 100% complete with respect to direct materials. A total of 5,000 units were started during the period. A total of 2,000 units were in the ending work-in-process inventory.

Using the data for Jaunty Coffee Company, which statement is true regarding costs per unit and ending work-in-process inventory?

• The conversion costs per unit are usually different for the beginning work-in process inventory and costs incurred during the current period, but the same for direct materials cost per unit.

• The costs per units of both direct materials and conversion costs are usually the same for the beginning work-in-process inventory and costs incurred during the current period.

• The costs per unit for direct materials are different for the beginning work-in-process inventory and costs incurred during the current period, but different for conversion costs per unit.

• The costs per unit of both direct materials and conversion costs are different for the beginning work-in-process inventory and costs incurred during the current period.

  Correct! The calculations for both direct materials costs and conversion costs are made separately for beginning work-in-process inventory and the current period and are usually different from each other. In Jaunty Coffee Companys case, both beginning inventory and ending inventory are 100% complete, while conversion costs are 40% and 30% respectively.

I know which one is the right answer. I do not understand how we know the ending inventory is 100%, the conversion cost is 40% and 30%.

Based on the information given, how do you get 40% and 30% for conversion costs?