Question

mation apk in-proce cost of com Required information The following information applies to the questions displayed below.) Pacific Ink had beginning work-in-process inventory of $890,960 on October 1. of this amount, $358,200 was the cost of direct materials and 5532,760 was the cost of conversion. The 62,000 units in the beginning inventory were 25 percent complete with respect to both direct materials and conversion costs. During October, 130,000 units were transferred out and 44,000 remained in ending inventory. The units in ending inventory were 75 percent complete with respect to direct materials and 35 percent complete with respect to conversion costs. Costs incurred during the period amounted to $3,304,000 for direct materials and $4,130,820 for conversion. 0-1. Compute the cost of goods transferred out and the cost of ending inventory using the FIFO method. 0-2. Is the ending inventory higher or lower under the weighted average method compared to FIFO?

Answer 1

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FIFO Method		Materials	Conversion
Units to be assigned costs:						Workings
Beginning Inventory in Process	62,000.00	46,500.00	46,500.00	B		Started and completed in same month
Started and completed in same month	68,000.00	68,000.00	68,000.00	See Note A	This is Whole units* % pending to complete. Material and is Conversion 25% complete, so 75% completed this month.	Goods finished -
Goods finished	130,000.00	114,500.00	114,500.00	C=A+B		Less: Opening work in process
Ending, Inventory in Process	44,000.00	33,000.00	15,400.00	D	This is Whole units* % completed. Material is 75% complete. Conversion is 35% complete.	Started and completed in same month
Total units to be assigned costs:	174,000.00	147,500.00	129,900.00	E=C+D
COSTS				Total
Costs per equivalent unit
Total costs for the month		3,304,000.00	4,130,820.00	7,434,820.00	F
Total equivalent units		147,500.00	129,900.00		See E
Costs per equivalent unit		22.40	31.80		G=F/E
Costs assigned to production
Beginning Inventory in Process		358,200.00	532,760.00	890,960.00	H
Costs incurred during the month				7,434,820.00	I
Total costs accounted for				8,325,780.00	J=H+I
Step 4
Costs allocated to completed and partially completed units
Beginning Inventory in Process				890,960.00	H
To complete Inventory in Process		1,041,600.00	1,478,700.00	2,520,300.00	K=G*B
Started and completed in same month		1,523,200.00	2,162,400.00	3,685,600.00	L=G*A
Finished goods for the month				7,096,860.00	M=H+K+L	This is cost of goods transferred under FIFO.
Ending, Inventory in Process		739,200.00	489,720.00	1,228,920.00	N=D*G	This is Ending Inventory under FIFO.
Total costs assigned				8,325,780.00	O=M+N

Weighted Average Method	Whole Units	Equivalent Units
		Materials	Conversion
Units to be assigned costs:						Workings
Beginning Inventory in Process	62,000.00	62,000.00	62,000.00	B		Started and completed in same month
Started and completed in same month	68,000.00	68,000.00	68,000.00	See Note A		Goods finished -	130,000.00
Goods finished	130,000.00	130,000.00	130,000.00	C=A+B		Less: Opening work in process	62,000.00
Ending, Inventory in Process	44,000.00	33,000.00	15,400.00	D	This is Whole units* % completed. Material is 75% complete. Conversion is 35% complete.	Started and completed in same month	68,000.00	A
Total units to be assigned costs:	174,000.00	163,000.00	145,400.00	E=C+D
COSTS				Total
Costs per equivalent unit
Total costs for the month		3,662,200.00	4,663,580.00	8,325,780.00	F
Total equivalent units		163,000.00	145,400.00		See E
Costs per equivalent unit		22.47	32.07		G=F/E
Costs assigned to production
Beginning Inventory in Process		358,200.00	532,760.00	890,960.00	H
Costs incurred during the month		3,304,000.00	4,130,820.00	7,434,820.00	I
Total costs accounted for				8,325,780.00	J=H+I
Step 4
Costs allocated to completed and partially completed units
To complete Inventory in Process		1,392,984.05	1,988,596.70	3,381,580.75	K=G*B
Started and completed in same month		1,527,788.96	2,181,041.54	3,708,830.50	L=G*A
Finished goods for the month				7,090,411.25	M=H+K+L	This is cost of goods transferred under Weighted Average.
Ending, Inventory in Process		741,426.99	493,941.76	1,235,368.75	N=D*G	This is Ending Inventory under Weighted Average.
Total costs assigned				8,325,780.00	O=M+N

Answer a 2
Ending Inventory under FIFO	1,228,920.00
This is Ending Inventory under Weighted Average.	1,235,368.75
So Ending Inventory under Weighted Average is higher than FIFO.