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

Pacific Ink

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

Ending inventory = $1,211,840

Step-by-step 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