Assume there were 6,000 units in beginning work in process, 60% complete. 20,000 units were completed during the month. Ending work in process is 40% complete, which is equivalent to 3,200 units for conversion costs. Materials are added at the beginning of the process. The FIFO method is used.
The number of units started this month is:
A) 20,000 units
B) 22,000 units
C) 28,000 units
D) 15,280 units

Question

Quizplus · Accepted Answer

To determine the number of units started during the month:

Units to account for = Beginning WIP units + Units started during the month

Units to account for = (6,000 * 60%) + Units started
Units to account for = 3,600 + Units started

Units accounted for = Units completed + Ending WIP units
Units accounted for = 20,000 + (3,200 * 40%)

Units accounted for = 20,000 + 1,280
Units accounted for = 21,280

To find the units started, we can rearrange the equation:

Units started = Units to account for - Units accounted for
Units started = (3,600 + Units started) - 21,280
Units started = Units started - 17,680

Bringing Units started to one side, we get:

Units started = 17,680

Therefore, the number of units started this month is 17,680 or 22,000 (including the beginning WIP units). But since we are given only the options and the closest answer is (B) 22,000 units, that is the best choice.

Assume There Were 6,000 Units in Beginning Work in Process