Pacific Ink had beginning work-in-process inventory of $985,960 on October 1. Of
ID: 2564771 • Letter: P
Question
Pacific Ink had beginning work-in-process inventory of $985,960 on October 1. Of this amount, $412,500 was the cost of direct materials and $573,460 was the cost of conversion.The 60,000 units in the beginning inventory were 30 percent complete with respect to both direct materials and conversion costs.
During October, 126,000 units were transferred out and 42,000 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 $3,186,000 for direct materials and $3,943,680 for conversion.
a-1. Compute the cost of goods transferred out and the cost of ending inventory using the FIFO method. (Round intermediate calculations to 2 decimal places.)
Cost of goods transferred out
Cost of ending inventory
Explanation / Answer
Pacific Ink Cost of Production Report For the M/o October FIFO Method Particulars Equivalent Units Physical Units Materials Conversion Costs Units to be accounted for Work in process - Beginning 60,000 Started into production - 168,000 - 60,000 108,000 Total units 168,000 Units accounted for Goods Units Completed & transferred out (126,000 Units) : From Beginning WIP 60,000 42,000 42,000 (70% materials, 70% conversion costs) Started & Completed (126,000 - 60,000) 66,000 66,000 66,000 Work in process, Ending 42,000 33,600 16,800 (80% materials, 40% conversion costs) Equivalent units accounted for 168,000 141,600 124,800 Materials Conversion Costs Total Total Cost to Account for: WIP, Beginning 412,500 573,460 985,960 Cost added in current period 3,186,000 3,943,680 7,129,680 Total cost to be account for 3,598,500 4,517,140 8,115,640 Cost added in current period 3,186,000 3,943,680 7,129,680 Equivalent Units of work done in current Period 141,600 124,800 Cost per Equivalent Unit 22.50 31.60 54.10 Assignment of Costs: Goods Units and Completed out (126,000 Units) WIP, Beginning - 60,000 Units 412,500 573,460 985,960 Cost added to Beg. WIP in Current period 945,000 1,327,200 2,272,200 (42,000 Nos X $22.50) (42,000 Nos X $31.60) Total of Beginning Inventory 1,357,500 1,900,660 3,258,160 Started and completed - 66,000 Units 1,485,000 2,085,600 3,570,600 (66,000 Nos X $22.50) (66,000 Nos X $31.60) Total Cost of good units completed & transferred out 2,842,500 3,986,260 6,828,760 WIP, Ending - 42,000 Units 756,000 530,880 1,286,880 (33,600 Nos X $22.50) (16,800 Nos X $31.60) Total Cost accounted For 3,598,500 4,517,140 8,115,640 Cost of Goods Transferred Out - 126,000 Units 6,828,760 Cost of Ending Inventory - 42,000 Units 1,286,880
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