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 costs of goods transferred out and the ending inventory using the weighted-average method.

Answer 1

Answer:

Pacific Ink

Cost of goods transferred out = $6,540,420

Ending inventory = $1,211,840

Explanation:

a) Data and Calculations:

                                        Units         Materials      Conversion      Total

Beginning WIP inventory                  $402,560       $557,100    $959,660

Costs incurred during the period $3,005,200   $3,786,840 $6,792,040

Total production costs                  $3,407,700    $4,343,940  $7,751,700

Units in WIP inventory   58,000      30%                30%

Units transferred out   122,000     100%              100%

Ending inventory           40,000      80%                40%

Units started                104,000 (122,000 + 40,000 - 58,000)

Equivalent unit of production    Units     Materials      Conversion

Units transferred out              122,000     122,000        122,000

Ending inventory                      40,000      32,000           16,000

Equivalent units                                        154,000         138,000

Cost per equivalent unit:

Total production costs                  $3,407,700    $4,343,940

Equivalent units                                  154,000          138,000

Cost per equivalent unit                      $22.13             $31.48

Costs assigned to:

Cost of goods transferred out    $2,699,860     $3,840,560    $6,540,420

Ending inventory                                708,160           503,680         1,211,840

Total costs assigned                   $3,408,020      $4,344,240    $7,752,260