[The following information applies to the questions displayed below.] 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:
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 weighted-average method.

Pacific Ink

a. The equivalent units for materials and conversion costs are:

                                              Materials          Conversion  

Equivalents units                   126,000                114,000

b. The cost per equivalent unit for direct materials and for conversion costs using the weighted-average method are:

Cost per equivalent unit         $21.02                $30.42

Explanation:

a) Data and Calculations:

                                              Materials          Conversion        Total

Work in process, Oct. 1        $304,920          $440,040       $744,960

Costs incurred in October  2,343,600         3,027,840       5,371,440

Total costs of production $2,648,520       $3,467,880     $6,116,400

Units:

Work in process, Oct. 1       48,000 (30%)      48,000 (30%)

Units transferred out        102,000 (100%)   102,000 (100%)

Work in process, Oct. 31    30,000 (80%)      30,000 (40%)

Equivalent units of production:

Units transferred out        102,000 (100%)   102,000 (100%)

Work in process, Oct. 31    24,000 (80%)       12,000 (40%)

Total equivalent units       126,000                114,000

Cost per equivalent units:

Total costs of production $2,648,520       $3,467,880     $6,116,400

Total equivalent units            126,000              114,000

Cost per equivalent unit          $21.02              $30.42

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