Question

Pacific Ink had beginning work-in-process inventory of $1,005,960 on October 1. Of this amount, $423,500 was...

Pacific Ink had beginning work-in-process inventory of $1,005,960 on October 1. Of this amount, $423,500 was the cost of direct materials and $582,460 was the cost of conversion. The 61,000 units in the beginning inventory were 30 percent complete with respect to both direct materials and conversion costs.

During October, 128,000 units were transferred out and 43,000 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 $3,314,300 for direct materials and $4,022,730 for conversion.

Required:

a. Compute the equivalent units for the materials and conversion cost calculations.

b. Compute the cost per equivalent unit for direct materials and for conversion costs using the FIFO method.

Homework Answers

Answer #1

a) Equivalent unit:

Whole unit %material EUP Material %conversion EUP Conversion
1 Beginning WIP 61000 70% 42700 70% 42700
2 Unit started and completed(128000-610000) 67000 100% 67000 100% 67000
3 Ending WIP 43000 80% 34400 40% 17200
4 Equivalent unit(1+2+3) 171000 144100 126900

b) cost per equivalent unit:

Material conversion
1 cost added 3314300 4022730
2 equivalent unit 144100 126900
3 cost per equivalent unit 23 31.70
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