A company is engaged in manufacturing a product that passes through two Work-in-Progress (WIP) processes or departments. The nature of the product is such that Direct Materials (DM) and Conversion Costs (CC) accrue evenly throughout the process. The company uses imported DM in its product, but now import is altogether banned, and this company has 5 kg left in raw materials inventory with no further procurement possible.
On June 30, there were 12 units that were incomplete and had consumed 9 kg of raw materials. The degree of completion of WIP Inventory as of June 30 was 75%. In the given scenario, how many units could be started and completed on July 1?

Question

Quizplus · Accepted Answer

As of the 30^th of June, 12 units were 75% complete and had consumed 9 kg. So, to complete these 12 units of the remaining 25%, an additional 3 kg will be consumed (if 75% used 9 kg, then 25% would use how many kgs?). The company has 5 kg in RM inventory, of which 3 kg will be consumed to finish the opening WIP inventory, so on July 1, the balance of 2 kg will be used for an additional 2 new units.

A Company Is Engaged in Manufacturing a Product That Passes