Question

Pacific Ink had beginning work-in-process inventory of $1,070,790 on October 1. Of this amount, $436,900 was the cost of direct materials and $633,890 was the cost of conversion. The 65,000 units in the beginning inventory were 30 percent complete with respect to both direct materials and conversion costs.

During October, 136,000 units were transferred out and 47,000 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 $3,390,200 for direct materials and $4,343,130 for conversion.

Exercise 8-37 (Algo) Compute Costs per Equivalent Unit: Weighted-Average Method (LO 8-3)

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.

c. Compute the costs of goods transferred out and the ending inventory using the weighted-average method. (Round intermediate calculations to 2 decimal places.)

Answer 1

1
	Materials	Conversion
Units completed and transferred out	136000	136000
Work in process, ending:
47000 X 80%	37600
47000 X 40%		18800
Equivalent units of production	173600	154800
Equivalent units for materials	173600
Equivalent units for conversion costs	154800
2
	Materials	Conversion
Work in process, October 1	436900	633890
Cost added during October	3390200	4343130
Total costs	3827100	4977020
Divide by Equivalent units of production	173600	154800
Cost per Equivalent unit	22.05	32.15
Cost per Equivalent unit:
Direct Materials	22.05
Conversion costs	32.15
3
	Materials	Conversion	Total
Work in process, ending units	37600	18800
X Cost per Equivalent unit	22.05	32.15
Cost of ending work in process inventory	829080	604420	1433500
	Materials	Conversion	Total
Units completed and transferred out	136000	136000
X Cost per Equivalent unit	22.05	32.15
Cost of Units completed and transferred out	2998800	4372400	7371200
Costs of goods transferred out	7371200
Ending inventory	1433500