Pacific Ink had beginning work-in-process inventory of $821,960 on October 1. Of this amount, $330,000 was the cost of direct materials and $491,960 was the cost of conversion. The 52,000 units in the beginning inventory were 30 percent complete with respect to both direct materials and conversion costs.

During October, 110,000 units were transferred out and 34,000 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 $2,553,600 for direct materials and $3,326,400 for conversion.

Exercise 8-40 (Algo) Assign Costs to Goods Transferred Out and Ending Inventory: FIFO Method (LO 8-2, 5)

a-1. Compute the cost of goods transferred out and the cost of ending inventory using the FIFO method.

a-2. Is the ending inventory higher or lower under the weighted-average method compared to FIFO?

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.