=+5-42 KKK Weighted-average method OBJECTIVES 8, 9 Mahonri Ltd manufactures car seats in its Napier plant. Each car seat passes through the Assembly Department and the Testing Department. This problem focuses on the Assembly Department. The process-costing system at Mahonri Ltd has a single direct cost category (direct materials) and a single indirect cost category (conversion costs). Direct materials are added at the beginning of the process. Conversion costs are added evenly during the process. When the Assembly Department finishes work on each car seat, it is immediately transferred to Testing.

206 Chapter 5: Product and service costing M05_HORN3377_02_LT_C05.indd 206 2/09/13 3:24 PM Mahonri Ltd uses the weighted-average method of process costing. Data for the Assembly Department for October 2014 are:

Physical units

(car seats) Direct materials Conversion costs Work in process, 1 Octobera 5 000 $1 475 000 $462 750 Started during October 2014 20 000 Completed during October 2014 22 500 Work in process, 31 Octoberb 2 500 Total costs added during October 2014 $6 100 000 $3 187 500 a

Degree of completion: direct materials, ?%; conversion costs, 60%.

b Degree of completion: direct materials, ?%; conversion costs, 70%.

Required 1 Calculate equivalent units of direct materials and conversion costs. Hint: The degree of completion for direct materials can be inferred from when the direct materials are added to the process.