TFP Limited operates a process costing system and uses the first in first out method when valuing closing work in progress and finished units of production. During the month of August, 31,300 equivalent units of material were used in the process. The 2,000 units of opening work in progress were 60% complete with respect to materials. At the end of August, work in progress consisted of 5,000 units which were 50% complete with respect to materials. How many units of production were started and completed during the month of August?
A) 27,600
B) 28,000
C) 28,800
D) 30,000

Question

Quizplus · Accepted Answer

To find the number of units started and completed during the month, we first calculate the equivalent units for materials considering the FIFO method. The calculation is as follows:- Opening WIP (2,000 units) was already 60% complete, so the remaining 40% needed to complete these units equals 800 equivalent units (2,000 units * 40%).- The closing WIP consists of 5,000 units at 50% completion, which equals 2,500 equivalent units (5,000 units * 50%).The total equivalent units used during the month were 31,300. To find the equivalent units for units started and completed, we subtract the equivalent units needed to complete the opening WIP and add the equivalent units for the closing WIP:$$ \text{Equivalent units for started and completed} = \text{Total equivalent units} - \text{Equivalent units to complete opening WIP} + \text{Equivalent units for closing WIP} $$$$ = 31,300 - 800 + 2,500 = 33,000 $$However, this calculation does not directly give us the units started and completed; it gives us the total equivalent units considering the material. The question asks for the number of units started and completed, which is different.To correct the approach: The total material used during the month was for completing the opening WIP, starting and completing new units, and starting the closing WIP. The calculation provided does not directly lead to the correct answer for units started and completed. Instead, we should focus on the flow of units through the process:1. Units to complete opening WIP = 2,000 units * (1 - 60%) = 800 units (not equivalent units, but actual units needed to complete the calculation).2. Units in closing WIP = 5,000 units * 50% = 2,500 equivalent units for materials.The correct approach involves calculating the units that were started and completed based on the flow of units through the process, considering the FIFO method, and the information provided does not directly lead to a straightforward calculation without considering the specific method to adjust for the opening and closing work in progress under the FIFO method.Given the misunderstanding in the explanation, the correct calculation should focus on the units that were fully processed during the period, which involves adjusting for the opening WIP and the units in closing WIP to find the actual number of units started and completed. The provided calculation and explanation do not accurately reflect the steps needed to arrive at the correct answer based on the FIFO method and the given data. The correct approach would involve adjusting the total units accounted for by the opening WIP and the closing WIP to find the units that were actually started and completed during the period.

TFP Limited Operates a Process Costing System and Uses the First