Hendrix, Inc. employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities:
On July 1: Beginning inventories = 750 units, 60% complete
Direct materials cost = $5,925
Conversion costs = $4,095
During July: 15,000 units started
Direct materials added = $150,000
Conversion costs added = $83,520
On July 31: Ending inventories = 1,500 units, 40% complete
Using the FIFO method, the number of units started and completed in July was:

Question

Quizplus · Accepted Answer

To calculate the number of units started and completed in July using the FIFO method, we first determine the total units accounted for, then subtract the units in beginning and ending inventories, adjusting for their completion percentages. Units started and completed = Units started during July - (Beginning inventory units not completed at the start of July + Ending inventory units not completed at the end of July). Units started during July = 15,000. Units not completed at the start of July = 750 units (since they were already in process and thus not started and completed in July). Units not completed at the end of July = 1,500 units * 60% completion = 900 units (since 40% are complete, 60% are not completed). Therefore, units started and completed = 15,000 - (750 + 900) = 13,500.