In a manufacturing company using a perpetual inventory system, how are the units completed and transferred out during a period calculated?

• A. By adding the units in beginning inventory to the units in ending inventory
• B. By counting only the units in ending inventory at the end of the period
• C. By adding the units started during the period to the units in beginning inventory, then subtracting the units in ending inventory
• D. By subtracting the units started during the period from the units in ending inventory

Answer: (C)

Verified step by step guidance

1. Understand the concept: In a manufacturing company using a perpetual inventory system, the calculation of units completed and transferred out during a period involves tracking the flow of inventory. This includes beginning inventory, units started during the period, and ending inventory.
2. Step 1: Identify the units in beginning inventory. These are the units that were already in process at the start of the period.
3. Step 2: Add the units started during the period. These are the new units that were introduced into production during the current period.
4. Step 3: Subtract the units in ending inventory. These are the units that remain in process at the end of the period and have not yet been completed or transferred out.
5. Step 4: The formula for calculating units completed and transferred out is: \( \text{Units Completed and Transferred Out} = \text{Units in Beginning Inventory} + \text{Units Started During the Period} - \text{Units in Ending Inventory} \).