Pacific Ink had beginning work-in-process inventory of $959,660 on October 1. Of

Question

Pacific Ink had beginning work-in-process inventory of $959,660 on October 1. Of this amount, $402,560 was the cost of direct materials and $557,100 was the cost of conversion.The 58,000 units in the beginning inventory were 30 percent complete with respect to both direct materials and conversion costs. During October, 122,000 units were transferred out and 40,000 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 $3,005,200 for direct materials and $3,786,840 for conversion. Required: 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

Pacific Ink Units Equivalent Units Material Conversion costs Beginning Inventory 58,000 40,600 40,600 Units completed and transferred 64,000 64,000 64,000 Ending Inventory 40,000 32,000 16,000    Total equivalent Units 1,36,600 1,20,600 Costs incurred during the month $30,05,200 $37,86,840 Equivalent cost per unit $22.00 $31.40 cost of goods transferred out Units Material Conversion costs Total Beginning Work in process 58,000 $4,02,560 $5,57,100 $9,59,660 Cost of Completion during the month $8,93,200 $12,74,840 $21,68,040 Units started & Completed $14,08,000 $20,09,600 $34,17,600     Cost of goods transferred out $27,03,760 $38,41,540 $65,45,300 cost of ending inventory Ending Inventory 40,000 $7,04,000 $5,02,400 $12,06,400

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