Question

Pacific Ink had a beginning work-in-process inventory of $861,960 on October 1. Of this amount, $351,920 was the cost of direct materials and $510,040 was the cost of conversion. The 54,000 units in the beginning inventory were 30 percent complete with respect to both direct materials and conversion costs. During October, 114,000 units were transferred out and 36,000 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 $2,721,900 for direct materials and $3,478,200 for conversion.
Compute the cost of goods transferred out and the cost of ending inventory using the FIFO method.

Answer 1

Answer:

Cost of goods transferred out (FIFO)        = $ 6122589.82

Cost of Ending Inventory =  $ 939,470.18

Explanation:

                                Units                 % of Completion           EUP

                                                        D.M         C.C                  D.M        C.C

Units completed 114,000              100         100            114,000      114,000

Ending Inventory 36,000              80          40            28,800         14400

Total Equivalent Units Of Production                       142,800        128,400

Direct Materials= $ $2,721,900/142,800 = $ 19.0761

Conversion Costs = $3,478,200/ 128,400= $ 27.089

                                 

Cost of Ending Inventory = $549,391.68 + $390,078.5= $ 939,470.18

Materials = $ 19.0761* 28,800      = $549,391.68

Conversion Costs =$ 27.089 *14400 = $390,078.5

Beginning work-in-process inventory Costs  $861,960

Costs incurred During the period= $2,721,900 + $3,478,200= $ 6200100

Cost of goods transferred out = Beg Inventory + Units Started- Ending Inv

Cost of goods transferred out    =$861,960 + $ 6200100-$ 939,470.18

Cost of goods transferred out         = $ 6122589.82