How to Calculate Units in Beginning Inventory for Bildy Corp's Process Costing System?

What is the total number of units in beginning inventory on January 1 for Bildy Corp based on the given data?

There were 1,750 units in beginning inventory on January 1.

Explanation

To calculate the units in beginning inventory on January 1, we need to account for the units that were started and completed during January. The units started during January were 10,800, and the units completed were 11,300. This means that there was an excess of 500 units completed. Therefore, these 500 units were part of the beginning inventory on January 1. Additionally, on January 31, there were 250 units that were 70% completed. This means that 30% of the work on these units was still remaining. So, the equivalent completed units for these 250 units would be 250 x 0.30 = 75 units. Therefore, these 75 units also belonged to the beginning inventory on January 1.

To find the total units in the beginning inventory, we add the units from the excess completed units (500 units) and the equivalent completed units of the partially completed units (75 units), which equals 575 units. Therefore, the total units in the beginning inventory on January 1 were 10,800 (started) - 11,300 (completed) + 575 = 1,750 units.
← How to find the best business idea for you A new skateboard shop breaking even calculation →

More Posts: