Question

Pacific Ink had beginning work-in-process inventory of $1,069,960 on October 1. Of this amount, $459,200 was the cost of direct materials and $610,760 was the cost of conversion. The 63,000 units in the beginning inventory were 30 percent complete with respect to both direct materials and conversion costs.

During October, 132,000 units were transferred out and 45,000 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 $3,578,400 for direct materials and $4,182,090 for conversion.

Compute the costs of goods transferred out and the ending inventory using the weighted-average method

	Cost of goods transferred out   Ending inventory

Answer 1

		Material	Conversion	Total
1)	Cost of Ending WIP	865,200	575,142	1,440,342
2)	Cost of Transferred Units	3,172,400	4,217,708	7,390,108
	Cost Reconciliation Report
	Costs to be accounted for:
		Total	Material	Conversion
	Costs in beginning inventory	1,069,960	459,200	610,760
	Cost added during the year	7,760,490	3,578,400	4,182,090
	Total cost to account for	8,830,450	4,037,600	4,792,850
		Total	Material	CC
	Cost Accounted for
	Units completed and transfer	7,390,108	3,172,400	4,217,708
	Units in ending inventory	1,440,342	865,200	575,142
	Total Cost Accounted for	8,830,450	4,037,600	4,792,850
	Pacific Ink
	Production Cost Report
	Working Note 1:
		Actual Units
	Calculation of Physical UNITS:
	Units in beginning inventory	63,000
	Units started during the period	114,000
	Units to be accounted for	177,000
		Actual Units	Equivalent Units
			Material	Conversion
	Units Completed and Transferred	132000	132000	132000
	Units in ending inventory	45000	36000	18000
	Total accounted for	177000	168000	150000
	Working Note 2:
	Costs to be accounted for:
		Total	Material	Conversion
	Costs in beginning inventory	1,069,960	459,200	610,760
	Cost added during the year	7,760,490	3,578,400	4,182,090
	Total cost to account for	8,830,450	4,037,600	4,792,850
	Equivalent Units from above		168000	150000
	Cost per equivalent unit		24.03	31.95