Question

Pacific Ink had beginning work-in-process inventory of $890,960 on October 1. Of this amount, $358,200 was the cost of direct materials and $532,760 was the cost of conversion. The 62,000 units in the beginning inventory were 25 percent complete with respect to both direct materials and conversion costs.

During October, 130,000 units were transferred out and 44,000 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 $3,304,000 for direct materials and $4,130,820 for conversion.

	Cost of goods transferred out $ Ending inventory

Pacific Ink had beginning work-in-process inventory of $905,260 on October 1. Of this amount, $371,520 was the cost of direct materials and $533,740 was the cost of conversion.The 56,000 units in the beginning inventory were 30 percent complete with respect to both direct materials and conversion costs.

During October, 118,000 units were transferred out and 38,000 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 $2,895,200 for direct materials and $3,631,680 for conversion.

(1) Compute the equivalent units for the materials and conversion cost calculations.

	Equivalent units for materials Equivalent units for conversion costs

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

	Cost Per Equivalent Unit Direct materials $22.00 Conversion costs

Answer 1

1) compute equivalent units of production under FIfo method

Particular	material	conversion
Unit's started and completed
Opening inventory	[56000×70%] 39200	[56000×70%] 39200
Unit's completed during this month	[62000×100%completion] 62000	[62000×100%] 62000
Ending inventory	[38000×80%] 30400	[38000×40%] 15200
Total equivalent units	131600	116400

2) calculate cost per equivalent units

Item of cost	material	conversion
(a)Cost incurred during the month	$2895200	$3631680
(b)Equivalent unit	131600	116400
Cost per Equivalent unit [a/b]	[$2895200/131600] $22	[$3631680/116400] $31.2

3) calculation of cost

a)Cost of ending inventory

   Material=30400units×$22=$668800

   Conversion=15200units×$31.2=$474240

Total cost of ending inventory=$668800+$474240=$1143040

b)cost of goods transferred out

Opening wip

   Cost already incurred=$905260

   Cost incurred during the month

   Material=39200×$22=$862400

   Conversion=39200×$31.2=$1223040

Unit's introduced and completed

   62000×[$22+31.2]=$3298400

Total cost of goods transferred=$905260+$862400+$1223040+3298400=$6289100

  

   ALL THE BEST

   PLEASE DO SUPPORT US

ANY doubt please comment below

THANK YOU