Beginning work in process consists of 7,000 units, 55% complete. 50,000 units were started and ending work in process is 5,000 units, 25% complete. Normal spoilage is equal to 10% of the units inspected. The inspection point occurs at the 20% point and 7,000 units were rejected. Direct materials are added at the 50% point, direct labor at 30% and overhead is applied uniformly. The costs per equivalent unit are: direct material $1.00; direct labor $1.50; overhead $2.00. The number of units completed is
A) 45,000
B) 47,000
C) 50,000
D) 57,000

Question

Quizplus · Accepted Answer

Units completed = Beginning WIP + Units started - Ending WIP= 7,000 + 50,000 - 5,000= 52,000 unitsUnits completed and transferred out = Units completed - Normal spoilage= 52,000 - (52,000 * 10%)= 46,800 unitsHowever, 7,000 units were rejected at the inspection point, which occurs at the 20% point. This means that these units were only 20% complete when they were rejected. Therefore, the equivalent units of production for these units is only 20% of 7,000 units, or 1,400 units.Therefore, the total number of units completed is 46,800 + 1,400 = 48,200 units.

Beginning Work in Process Consists of 7,000 Units, 55% Complete