Michael Company had 2,000 units in work in process at January 1 that were 80 percent complete.During January,15,000 units were completed.At January 31,4,000 units remained in work in process that were 40 percent complete.Using the average cost method,how many units were started during January?
A)21,000
B)18,200
C)17,000
D)19,000

Question

Quizplus · Accepted Answer

To find the number of units started during January, we first calculate the equivalent units of production. The beginning work in process had 2,000 units at 80% complete, so they needed 20% more work to be completed. However, for the average cost method, we don't differentiate between work done in the current and previous periods; we treat all work as part of the current period's effort. Thus, we consider the total units that were completed and the ending work in process. 15,000 units were completed, and there were 4,000 units at 40% completion at the end of the period. The calculation focuses on the units started and completed during the period, plus the ending work in process to find the total units accounted for in the period. Since the beginning inventory and the degree of completion don't directly affect the calculation of units started in the average cost method, we focus on the units completed and the ending inventory to find that 17,000 units must have been started during January to account for the completed units and the ending work in process inventory.

Michael Company Had 2,000 Units in Work in Process at January