Question

Required information The following information applies to the questions displayed below. Pacific Ink had beginning work-in-process inventory of $762.960 on October 1. Of this amount, $313.920 was the cost of direct materials and $449,040 was the cost of conversion. The 57,000 units in the beginning inventory were 25 percent complete with respect to both direct materials and conversion costs. During October, 120,000 units were transferred out and 39,000 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 $2,956,500 for direct materials and $3,737,220 for conversion Compute the costs of goods transferred out and the ending inventory using the weighted average method. (Round intermediate calculations to 2 decimal places.) orences Cost of goods transferred Ending inventory

Answer 1

Cost of goods transferred Ending Inventory 6,387,600 1,068,386 $ Working Notes: Step 1) Calculation of Equivalent units Whole Units IAL Equivalent Units Direct Materials Conversion % Completed Equivalent Units % Completed Equivalent Units [B] [ AB] [C] [ AC] 100% 120,000 100% 120,000 75% 29,250 35% 13,650 149,250 133,650 Units completed and transferred Ending Work in Process Total Equivalent Units 120,000 39,000 159,000 Step 2) Calculation Cost per equivalent Units Beginning Work in Process Add: Cost Incurred during the January Total Cost (a) Equivalent units (b) Cost per Equivalent Units (a/b) Direct Material conversion $ 313,920 $ 449,040 2,956,500 3,737,220 3,270,420 $ 4,186,260 149,250 133,650 21.91 $ 31.32 $

Step 3) Cost of goods transferred out Cost per Equivalent units Total Cost [B] [AB] $ 21.91 $ 2,629,200 $ 31.32 $ 3,758,400 $ 6,387,600 Equivalent Units [A] 120,000 120,000 Cost of goods transferred out Direct Materials Conversion Step 4) Calculation of Ending work in Process Inventory Direct Materials Conversion Equivalent Units [A] 29,250 13,650 Total Cost of Ending Work in Process Cost per Equivalent units Total Cost [B] [ AB] $ 21.91 $ 640,868 $ 31.32 $ 427,518 1,068,386 Note: Answer May differ due to cost per equivalent units rounded off to the two decimal places