Question

Pacific Ink had beginning work-in-process inventory of $387,380 on October 1. Of this amount, $158,120 was the cost of direct materials and $229,260 was the cost of conversion. The 22,000 units in the beginning inventory were 30 percent complete with respect to both direct materials and conversion costs.

  

During October, 51,000 units were transferred out and 16,000 remained in ending inventory. The units in ending inventory were 80 percent complete with respect to direct materials and 30 percent complete with respect to conversion costs. Costs incurred during the period amounted to $1,181,700 for direct materials and $1,523,320 for conversion

Required:

Compute the cost per equivalent unit for direct materials and for conversion costs using the weighted-average method. (Round your answers to 2 decimal places.)

Answer 1

Solution

	Material	Conversion
Cost per equivalent Unit	$           21.00	$             31.41

Working

Statement of Equivalent Units
				Material		Conversion
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred	51,000			100%	51,000	100%	51,000
Closing WIP	16,000			80%	12,800	30%	4,800
Total	67,000			Total	63,800	Total	55,800

Cost per Equivalent Units
COST		Material	Conversion	TOTAL
Beginning WIP Inventory Cost		$       1,58,120	$     2,29,260	$    3,87,380
Cost incurred during period		$     11,81,700	$ 15,23,320	$ 27,05,020
Total Cost to be accounted for		$     13,39,820	$ 17,52,580	$ 30,92,400
Total Equivalent Units		63,800	55,800
Cost per Equivalent Units		$             21.00	$           31.41