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. (1) Compute the equivalent units for the materials and conversion cost calculations. (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.)

Answer 1

FIFO method
Beggining units	60000	Transferred out	1,26,000
Started into production	108000	Ending units	42,000
	168000		168000
Equivalent units	Material	Conversion
Beginning units	60000	60000
Completion in current period	70%	70%
A	42000	42000
Units started and completed	66000	66000
Completion	100%	100%
B	66000	66000
Ending Units	42,000	42,000
Completion	80%	40%
C	33600	16800
Total units A+B+C	141600	124800
Cost per equivalent units
Per unit cost	Cost	Total units	Per unit cost
Material cost	3186000	141600	22.50
Conversion cost	3943680	124800	31.60
Total	7129680		54.10