Chapter 8, Problem 38E

Assign Costs to Goods Transferred Out and Ending Inventory: FIFO Method

Refer to the data in Exercise 8-35. Compute the cost of goods transferred out and the cost of ending inventory using the FIFO method. Is the ending inventory higher or lower under the weighted-average method compared to FIFO? Why?

8-35. Compute Costs per Equivalent Unit: Weighted-Average Method

Pacific Ink had beginning work-in-process inventory of $744,960 on October 1. Of this amount, $304,920 was the cost of direct materials and $440,040 was the cost of conversion. The 48,000 units in the beginning inventory were 30 percent complete with respect to both direct materials and conversion costs.

During October, 102,000 units were transferred out and 30,000 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 $2,343,600 for direct materials and $3,027,840 for conversion.

Required

Compute the cost per equivalent unit for direct materials and for conversion costs using the weighted-average method.