Question

Pacific Ink had beginning work-in-process inventory of $754,960 on October 1. Of this amount, $309,920 was the cost of direct materials and $445,040 was the cost of conversion. The 53,000 units in the beginning inventory were 25 percent complete with respect to both direct materials and conversion costs.

During October, 112,000 units were transferred out and 35,000 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 $2,687,500 for direct materials and $3,429,900 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:

Computation of Equivalent unit of Production - Weighted Average
Particulars	Physical Units	Material	Conversion
Units accounted for:
Unit completed & Transferred out	112000	112000	112000
Ending WIP:	35000
Material (75%)		26250
Conversion (35%)			12250
Equivalent units of production	147000	138250	124250

Computation of Cost per equivalent unit of Production - Weighted Average
Particulars	Material	Conversion	Total
Opening WIP	$309,920.00	$445,040.00	$754,960.00
Cost Added during the month	$2,687,500.00	$3,429,900.00	$6,117,400.00
Total cost to be accounted for	$2,997,420.00	$3,874,940.00	$6,872,360.00
Equivalent units of production	138250	124250
Cost per Equivalent unit	$21.68	$31.19	$52.87

Computation of Cost of ending WIP and units completed & transferred out
Particulars	Material	Conversion	Total
Equivalent unit of Ending WIP	26250	12250
Cost per equivalent unit	$21.68	$31.19
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$569,100	$382,078	$951,178
Units completed and transferred	112000	112000
Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	$2,428,160	$3,493,280	$5,921,440