Chapter 6: Costing - Methods 225 Core 2 - Retired Exam Set - Case 1 Multiple-Choice Questions 16. Healthy Gulp manufactures all-natural fruit and veggie juices for health-conscious consumers. The company uses a weighted-average process costing system, adding all materials at the start of the mixing process. Information for the mixing department for the month of January shows the following: Work in process, beginning Units in process (60% complete as to conversion costs) 2,000 Materials costs $5,200 Conversion costs $16,360 Work in process, ending Units in process (90% complete as to conversion costs) 4,000 Units started into production in January 18,000 Units completed and shipped in January 16,000 Materials costs added in January $52,400 Conversion costs added in January $162,000 Internal audit reviewed January's data and thinks that the estimated completion percentage for units in ending work in process is too high. If internal audit is correct, how will this overstatement impact ending work-in-process inventory and profits for the period? A. Both ending inventory and profit are overstated B. Ending inventory is understated and profit is overstated C. Ending inventory is overstated and profit is understated D. Both ending inventory and profit are understated