Pacific Ink had beginning work-in-process inventory of $1,069,960 on October 1.
ID: 2396321 • Letter: P
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.
a-1. Compute the cost of goods transferred out and the cost of ending inventory using the FIFO method. (Round intermediate calculations to 2 decimal places.)
Explanation / Answer
UNITS TO ACCOUNT FOR: Beginning Work in Process units 63,000 Add: Units Started in Process 114,000 Total Units to account for: 177,000 UNITS TO BE ACCOUNTED FOR: Units completed from Beginning WIP 63000 Units started and completed 69,000 Ending Work in Process 45,000 Total Units to be accounted for: 177,000 Equivalent Units: Material Cost Conversion % Completion Units % Completion Units Units completed from Beg. WIP 70% 44,100 70% 44,100 Units started and completed 100% 69,000 100% 69,000 Ending Work in Process 80% 36,000 40% 18,000 Total Equivalent units 149,100 131,100 COST PER EQUIVALENT UNIT: Material Conversion Total cost added during the year 3,578,400 4,182,090 Equivalent Units 149,100 131,100 Cost per Equivalent unit 24 31.9 TOTAL COST ACCOUNTED FOR: Units Completed from Beginning WIP (63000 units) Equivalent unit Cost per EU Total Cost Beginning Cost 1069960 Material 44,100 24 1058400 Conversion Cost 44,100 31.9 1406790 Cost of units completed from Beg WIP 3535150 Units started and Transferred out (69000 units) Equivalent unit Cost per EU Total Cost Material 69,000 24 1656000 Conversion Cost 69,000 31.9 2201100 Total Cost of Units completed and transferred out: 3857100 Ending Work in process (45,000 units) Equivalent unit Cost per EU Total Cost Material 36,000 24 864000 Conversison Cost 18,000 31.9 574200 Total cost of Ending Work in process: 1,438,200 Cost of Goods transferred out (3857100+3535150): 7392250 Cost of Ending Wip: 1438200
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