Pacific Ink had beginning work-in-process inventory of $748,960 on October 1. Of

Question

Pacific Ink had beginning work-in-process inventory of $748,960 on October 1. Of this amount, $306,920 was the cost of direct materials and $442,040 was the cost of conversion.The 50,000 units in the beginning inventory were 25 percent complete with respect to both direct materials and conversion costs During October, 106,000 units were transferred out and 32,000 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 $2,491,000 for direct materials and $3,203,820 for conversion value 0.75 points Required information Required (1) Compute the equivalent units for the materials and conversion cost calculations Equivalent units for materials Equivalent units for conversion costs (2) Compute the cost per equivalent unit for direct materials and for conversion costs using the FIFO method. (Round your answers to 2 decimal places.) Cost Per Equivalent Unit Direct materials

Explanation / Answer

Answer 1. Particulars Equivalent Units Physical Units Materials Conversion Costs Units Information Units Charged to Production Work in process - Beginning                     50,000 Started into production (138,000 - 50,000)                     88,000 Total units                   138,000 Units accounted for Goods Units Completed & transferred out: From Beginning WIP                     50,000                            37,500                       37,500 (75% materials, 75% conversion costs) Started & Completed (106,000 - 50,000)                     56,000                            56,000                       56,000 Work in process, Ending                     32,000                            24,000                       11,200 (75% materials, 35% conversion costs) Equivalent units accounted for                   138,000                         117,500                     104,700 Answer 2. Materials Conversion Costs Total Total Cost to Account for: WIP, Beginning                   306,920                         442,040                     748,960 Cost added in current period               2,491,000                      3,203,820                 5,694,820 Total cost to be account for               2,797,920                      3,645,860                 6,443,780 Cost added in current period               2,491,000                      3,203,820                 5,694,820 Equivalent Units of work done in current Period                   117,500                         104,700 Cost per Equivalent Unit                       21.20                              30.60                         51.80

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