Marston Corporation uses the first-in, first-out method in its process costing system. The equivalent units of production for March for conversion costs totaled 37,500 units. The beginning work in process inventory in March consisted of 15,000 units, 60% complete with respect to conversion costs. The ending work in process inventory in March consisted of 10,000 units, 75% complete with respect to conversion costs. The number of units started during the month was:
A) 41,500 units
B) 34,000 units
C) 25,000 units
D) 72,500 units

Question

Quizplus · Accepted Answer

To find the number of units started during the month, we first calculate the units to be accounted for, which includes the units in the beginning inventory plus the units started during the month. The equivalent units of production for conversion costs (37,500 units) include the completed units (units from beginning inventory that were completed and new units started and completed during the month) and the ending work in process inventory's equivalent units. The calculation is as follows:1. Calculate the equivalent units for the beginning inventory: 15,000 units * 40% (100% - 60% complete) = 6,000 units.2. Calculate the equivalent units for the ending inventory: 10,000 units * 75% = 7,500 units.3. Subtract the beginning inventory equivalent units from the total equivalent units and add the ending inventory equivalent units to find the equivalent units for units started and completed during the month: 37,500 - 6,000 + 7,500 = 39,000 units.4. Since the beginning inventory was 15,000 units and was completed during the month, we subtract this from the total units to account for the units started and completed during the month: 39,000 - 15,000 = 24,000 units.5. To find the total units started during the month, add the units that were in the ending inventory (not completed): 24,000 + 10,000 = 34,000 units.Therefore, the number of units started during the month is 34,000 units.

Marston Corporation Uses the First-In, First-Out Method in Its Process