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.

Required:

a. Compute the equivalent units for the materials and conversion cost calculations.

b. Compute the cost per equivalent unit for direct materials and for conversion costs using the weighted-average method.

Compute the equivalent units for the materials and conversion cost calculations.

	Equivalent units for materials   Equivalent units for conversion costs

	Cost Per Equivalent Unit Direct materials   Conversion costs

Answer 1

Solution

	Material	Conversion
Equivalent Units of Production	168,000	150,000

.

	Material	Conversion
Cost per equivalent Unit	$ 24.03	$ 31.95

Working

Statement of Equivalent Units(Weighted average)
			Material	Conversion
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	132,000			100%	132,000	100%	132,000
Ending WIP	45,000			80%	36,000	40%	18,000
Total	177,000			Total	168,000	Total	150,000

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion	TOTAL
Beginning WIP Inventory Cost (A)		$ 459,200	$ 610,760	$ 1,069,960
Cost incurred during period (B)		$ 3,578,400	$ 4,182,090	$ 7,760,490
Total Cost to be accounted for (C=A+B)		$ 4,037,600	$ 4,792,850	$ 8,830,450
Total Equivalent Units(D)		168,000	150,000
Cost per Equivalent Units (E=C/D)		$ 24.03	$ 31.95	$ 55.99