Salmont Corporation uses the first-in, first-out method in its process costing system. The company reported 30,800 equivalent units of production for materials last month. The company's beginning work in process inventory consisted of 8,000 units, 75% complete with respect to materials. The ending work in process inventory consisted of 6,000 units, 80% complete with respect to materials. The number of units started during the month was:
A) 32,000 units
B) 24,000 units
C) 6,800 units
D) 30,000 units

Question

Quizplus · Accepted Answer

The equivalent units of production for materials represent the number of units that are complete with respect to materials. To calculate the number of units started during the month, we need to use the following formula:

Units started = Total units completed - Ending work in process inventory + Beginning work in process inventory

To calculate the total units completed, we can use the equivalent units of production for materials and the percentage of completion of the ending work in process inventory:

Total units completed = Equivalent units of production + (Ending work in process inventory x Percentage of completion)

Total units completed = 30,800 + (6,000 x 0.80) = 35,400 units

Now, we can plug in the values to the formula above:

Units started = 35,400 - 6,000 + 8,000 = 37,400 - 6,000 = 31,400 units

Therefore, the best choice is D) 30,000 units, which is the closest answer to our calculation.

Salmont Corporation Uses the First-In, First-Out Method in Its Process