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Units started and completed (Process Costing)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Units started and completed (Process Costing)

  • This topic has 3 replies, 2 voices, and was last updated 2 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • April 18, 2023 at 3:19 pm #683138
    PurpleLotus
    Participant
    • Topics: 16
    • Replies: 13
    • ☆

    A company which operates a process costing system had work-in-progress at the start of last month of 300 units (valued at $1,710) which were 60% complete in respect of all costs. Last month a total of 2,000 units were completed and transferred to the finished goods warehouse. The cost per equivalent unit for costs arising last month was $10. The company uses the FIFO method of cost allocation.
    What was the total value of the 2,000 units transferred to the finished goods warehouse last month?
    A $19,910
    B $20,000
    C $20,510
    D $21,710

    Hello. I know the answer for the question is A and the units started and completed is 1700 however it’s kind of confusing me since the same logic doesn’t seem to be applying to the question below:

    The following Information relates to process 3 of a 3-stage production process for the month of January 20X4.

    Opening Inventory
    300 units complete as to:
    Materials from Process 2 100% $4400
    Added materials 90% $1150
    Labour 80% $540
    Production overhead 80% $810

    In January 20X4, a further 1800 units were transferred from process 2 at a valuation of $27000. Added materials amounted to $6600 and direct labor to $3270. Production overhead is absorbed at the rate of 150% of direct labor cost. Closing inventory at 31, January 20X4 amounted to 450 units, complete as you:

    Process 2 materials 100
    Added materials 60%
    Labour and overhead 50%

    DR
    Opening WIP 300units $6900
    Input from P2 1800units $27000
    Added materials 6600
    Direct Labour 3270
    Production Overhead 4905

    CR
    Opening WIP to to completed 300units $7320
    +
    Units started and completed 1350units $32400
    =
    Output 1650units $39720
    Closing WIP 450units $8955

    Does someone has a clear formula for finding units started and completed? Usually I just do Input-Closing WIP but that doesn’t seem to be working in the first example.

    April 18, 2023 at 5:21 pm #683150
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54696
    • ☆☆☆☆☆

    You cannot just learn a formula because it depends what information is given in the question. It is more important to understand what is happening rather than to just learn formulas.

    In the first question you are told that 2,000 units were completed. Given that 300 were in the WIP brought forward and went on to be completed, then the other 1,700 must have been started and finished in this period.

    In the second question you are not told how many units were completed in total. Given that they started with 300 and inout another 1,800, they were working on 2,100 units. 450 remained as WIP carried forward which means that the remaining 1,650 were completed.
    Now it is just like the first question in that of the 1,650 completed, 300 were already WIP at the start which means that the remaining 1,350 we started and finished in this period.

    I assume that you have watched my free lectures? The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.

    April 18, 2023 at 6:36 pm #683156
    PurpleLotus
    Participant
    • Topics: 16
    • Replies: 13
    • ☆

    Thank you!

    April 19, 2023 at 8:51 am #683181
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54696
    • ☆☆☆☆☆

    You are welcome.

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  • The topic ‘Units started and completed (Process Costing)’ is closed to new replies.

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