Question

Pacific Ink had beginning work-in-process inventory of $760,000 on October 1. Of this amount, $305,920 was the cost of direct materials and $454,080 was the cost of conversion.The 49,000 units in the beginning inventory were 30 percent complete with respect to both direct materials and conversion costs. During October, 104,000 units were transferred out and 31,000 remained in ending inventory.The units in ending inventory were 80 percent complete with respect to direct materials and 40 percent complete with respect to conversion costs. Costs incurred during the period amounted to $2,282,000 for direct materials and $3,101,850 for conversion. 3. value: 14.28 points Required information

a-1. Compute the cost of goods transferred out and the cost of ending inventory using the FIFO method. (Round intermediate calculations to 2 decimal places.)

Answer 1

Solution

	Total
Units Completed	$ 5,269,650
Ending Inventory	$ 874,200

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed		% completed this period
		Material	Conversion cost	Material	Conversion cost
Beginning WIP	49,000	30%	30%	70%	70%
Units introduced	86,000
Total units to be accounted for	135,000
Completed and Transferred unit	104,000	0%	0%	100%	100%
Ending WIP	31,000	0%	0%	80%	40%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material		Conversion cost
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	49,000	70%	34,300	70%	34,300
From units started/Introduced	55,000	100%	55,000	100%	55,000
Total	104,000		89,300		89,300
	Total Units	Material		Conversion cost
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	31,000	80%	24,800	40%	12,400
Total EUP	135,000		114,100		101,700

.

STEP 3
Cost per Equivalent Units AND Cost to be accounted for
	Material		Conversion cost		TOTAL
Cost incurred in Current Period	$ 2,282,000		$ 3,101,850		$ 5,383,850
Total Equivalent Units	114,100		101,700
Cost per Equivalent Units	$ 20.00		$ 30.50		$ 50.50
Cost of Beginning WIP					$ 760,000
Total cost to be accounted for					$ 6,143,850

.

STEP 4
Cost report [Including Reconciliation]
	Cost of	Units Transferred		104,000.00	units
		Equivalent Units [Step 2]	Cost per Equivalent Units [Step 3]	Cost of Units Transferred	TOTAL
A	From Beginning WIP:
	Material	34,300	$ 20.00	$ 686,000
	Conversion cost	34,300	$ 30.50	$ 1,046,150	$ 1,732,150
B	From units started & completed
	Material	55,000	$ 20.00	$ 1,100,000
	Conversion cost	55,000	$ 30.50	$ 1,677,500	$ 2,777,500
C=A+B	Total				$ 4,509,650
D	Cost of Beginning WIP				$ 760,000
E=C+D	Total Cost of Units transferred				$ 5,269,650
	Cost of	Ending WIP		31,000.00	units
		Equivalent Units [Step 2]	Cost per Equivalent Units [Step 3]	Cost of Ending WIP	TOTAL
F	Material	24,800	$ 20.00	$ 496,000
G	Conversion cost	12,400	$ 30.50	$ 378,200
H = F + G	Total Cost of Ending WIP				$ 874200.0
I = E + H	Total Cost accounted for				$ 6,143,850
J	Rounding Off Differences				$ 0
K = I + J	Total cost to be accounted for [equals to computed in STEP 3]				$ 6,143,850