Asked by Devyn Murray on May 02, 2024
Verified
Salmont Corporation uses the FIFO method in its process costing system.The company reported 30,800 equivalent units of production for materials last month.The company's beginning work in process inventory consisted of 8,000 units, 75% complete with respect to materials.The ending work in process inventory consisted of 6,000 units, 80% complete with respect to materials.The number of units started during the month was:
A) 32,000 units
B) 24,000 units
C) 6,800 units
D) 30,000 units
FIFO Method
An inventory valuation method that assumes items purchased or produced first are sold first, standing for "First-In, First-Out".
Equivalent Units
A term used in cost accounting to denote a conversion of partially completed goods to an equivalent number of fully completed units.
Process Costing
A costing method used when identical or similar items are mass-produced, allocating costs based on the process or departments through which the products pass.
- Scrutinize operational records to determine equivalent units of manufacturing for both materials and conversion outlays.
Verified Answer
FIFO method equivalent units of production
2,000 + X + 4,800 = 30,800X = 30,800 - 2,000 - 4,800 = 24,000
Units started and completed = Units started into production during the period - Units in ending inventory
24,000 = Units started into production during the period - 6,000
Units started into production during the period = 24,000 + 6,000 = 30,000
Learning Objectives
- Scrutinize operational records to determine equivalent units of manufacturing for both materials and conversion outlays.
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