Pacific Ink had beginning work-in-process inventory of $587,225 on October 1. Of
ID: 2502514 • Letter: P
Question
Pacific Ink had beginning work-in-process inventory of $587,225 on October 1. Of this amount, $312,500 was the cost of direct materials and $274,725 was the cost of conversion. The 23,500 units in the beginning inventory were 30 percent complete with respect to both direct materials and conversion costs.
During October, 47,500 units were transferred out and 20,000 remained in ending inventory. The units in ending inventory were 75 percent complete with respect to direct materials and 40 percent complete with respect to conversion costs. Costs incurred during the period amounted to $1,250,000 for direct materials and $1,556,775 for conversion.
Compute the costs of goods transferred out and the ending inventory using the weighted-average method.
Pacific Ink had beginning work-in-process inventory of $587,225 on October 1. Of this amount, $312,500 was the cost of direct materials and $274,725 was the cost of conversion. The 23,500 units in the beginning inventory were 30 percent complete with respect to both direct materials and conversion costs.
Explanation / Answer
UNITS STARTED INTO PRODUCTION = UNITS TRANSFERRED OUT(COMPLETED UNITS) + CLOSING WIP OPENING WIP
= 47500+20000 23500
= 44000 UNITS
INPUT
OPENING WIP = 23500
UNITS STARTED INTO PRODUCTION = 44000
TOTAL INPUT UNITS = 67500
OUTPUT -
UNITS TRANSFERRED OUT(COMPLETED UNITS) =47500
CLOSING WIP = 20000
TOTAL OUTPUT UNITS = 67500
PARTICULARS
PHYSICAL UNITS
DIRECT MATERIALS
CONVERSION COST
UNITS TRANSFERRED OUT(COMPLETED UNITS)
47500
47500*100%
=47500
100%
47500*100%
= 47500
100%
CLOSING WIP
20000
20000*75%
=15000
75%
20000*40%
=8000
40%
TOTAL EQUIVALENT UINITS
62500
55500
DIRECT MATERIALS
CONVERSION COST
OPENING WIP COST
312500
274725
CURRENT PRODUCTION COST
1250000
1556775
TOTAL COST
1562500
1831500
EQUIVALENT UNITS
62500
55500
COST PER EQUIVALENT UNIT
25 P.U.
33 P.U.
COST OF UNITS TRANSFERRED OUT(COMPLETED UNITS) = 47500*(25+33)
= $2755000
COST OF ENDING INVENTORY (OR CLOSING WIP) = 15000*25 + 8000*33
= $639000
PARTICULARS
PHYSICAL UNITS
DIRECT MATERIALS
CONVERSION COST
UNITS TRANSFERRED OUT(COMPLETED UNITS)
47500
47500*100%
=47500
100%
47500*100%
= 47500
100%
CLOSING WIP
20000
20000*75%
=15000
75%
20000*40%
=8000
40%
TOTAL EQUIVALENT UINITS
62500
55500
DIRECT MATERIALS
CONVERSION COST
OPENING WIP COST
312500
274725
CURRENT PRODUCTION COST
1250000
1556775
TOTAL COST
1562500
1831500
EQUIVALENT UNITS
62500
55500
COST PER EQUIVALENT UNIT
25 P.U.
33 P.U.
COST OF UNITS TRANSFERRED OUT(COMPLETED UNITS) = 47500*(25+33)
= $2755000
COST OF ENDING INVENTORY (OR CLOSING WIP) = 15000*25 + 8000*33
= $639000
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