Question

All direct materials are placed in process at the beginning of production and the first-in, first-out method of inventory costing is used. What is the total cost of the units started and completed during the period (round unit cost calculations to four decimal places)?

Answer 1

Answer:Please refer to the explanation section

Explanation:

The question is incomplete, production figures are missing. We will provide assumed figures in order to illustrate the process of determining units started and completed.

First in First out Costing Method

First in First out Method is a method that controls the flow of inventory. First In First Out Method stipulates that when inventory is sold, we start by selling oldest inventory first. Similar concept is applied in the production process, When we start production in the current period we start with opening work in progress units first before we start producing new units in the current period.

opening work in progress   = 5000 units

units started in the current period = 12000 units

Closing work in Progress  = 3000

Units Started and Completed = units started in the current period - closing work in progress units

Units Started and Completed = 12000 - 3000

Units Started and Completed = 9000