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. (Round intermediate calculations to 2 decimal places.)

Answer 1

Solution:

Equivalent units of production (EUP) - Weighted Average method
	Units	% material	EUP-Materials	% Conversion	EUP- Conversion
Units Completed and transferred out	132000	100%	132000	100%	132000
units of Ending work in process	45000	80%	36000	40%	18000
Equivalent units of production			168000		150000

Cost per Equivalent unit:	Material	Conversion
Cost of Beginning Work in Process	$4,59,200	$6,10,760
Cost added during June	$35,78,400	$41,82,090
Total Costs	$40,37,600	$47,92,850
/Equivalent units of Production	168000	150000
Cost per Equivalent unit of Production	$24.03	$31.95

Cost of Units Transferred Out	EUP	Cost per EUP	Total Cost
Material	132000	$24.03	$31,71,960
Conversion	132000	$31.95	$42,17,400
Total transferred out			$73,89,360

Cost of ending work in process	EUP	Cost per EUP	Total Cost
Material	36000	$24.03	$8,65,080
Conversion	18000	$31.95	$5,75,100
Total Ending work in process			$14,40,180