Information about Hoffman's Company's process-costing system:
Assembly department data:
Weighted-average cost per equivalent data and total costs accounted for:
Only requirement 5 needs an answer
Hoffman Company manufactures car seats in its Boise plant. Each car seat passes through the assembly department and the testing department. This problem focuses on the assembly department. Click the icon to view information about Hoffman Company's process-costing system.) i More Info The process-costing system at Hoffman Company 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. Hoffman Company uses the FIFO method of process costing. Data for the assembly department for October 2017 are as follows: (Click the icon to view the assembly department data.) (Click the icon to view the weighted average cost per equivalent unit data and total costs accounted for.) Data Table Physical Units Direct Conversion (Car Seats) Materials Costs Work in process, October 18 4,000 $1,248,000 $241,650 Started during October 2017 22,500 Completed during October 2017 26,000 Work in process, October 31b 500 Total costs added during October 2017 $4,635,000 $2,575,125 Degree of completion: direct materials, ?%; conversion costs, 45%. Degree of completion: direct materials, ?%, conversion costs, 65%. Reference - Direct Conversion Materials Costs Costs incurred to date $ 5,883,000 $ 2,816,775 Divide by equivalent units of work done to date 26,500 26,325 $ 222 $ 107 Cost per equivalent unit for work done to date Total Direct Conversion Production Costs Materials Costs Completed and transferred out $ 8,554,000 $ 5,772,000 $ 2,782,000 Work in process, ending 145,775 111,000 34,775 $ 8,699,775 S Total costs accounted for 5,883,000 $ 2,816,775 Requirement 1. For each cost category, compute equivalent units in the assembly department. Show physical units in the first column of your schedule. (For amounts with a 0 balance, make sure to enter "O" in the appropriate cell.) Equivalent Units Direct Conversion Physical Units Flow of Production Materials Costs Work in process beginning 4.000 22,500 Started during current period 26,500 To account for Completed and transferred out during current period: From beginning work in process Started and completed 4,000 0 2,200 22,000 22.000 22.000 500 Work in process, ending 500 325 28.500 Accounted for 22.500 24,525 Equivalent units of work done in current period only Requirement 2. For each cost category, summarize total assembly department costs for October 2017 and calculate the cost per equivalent unit. Begin by summarizing the total costs to account for. Total Direct Conversion Production Costs Materials Costs S 241,650 2.575,125 Work in process, beginning 1.489,650 $ 1.248,000 $ Costs added in current period 7,210,125 4.635,000 Total costs to account for 8.699.775 S 5,883,000 $ Next calculate cost per equivalent unit for direct materials and conversion costs. 2,816,775 Direct Conversion Materials Costs $ 4,635,000 $ 2.575,125 22,500 24,525 Costs added in current period Divide by equivalent units of work done in current period Cost per equivalent unit for work done in current period 206 S 105 Requirement 3. Assign total costs to units completed and transferred out and to units in ending work in process. Begin by calculating the total from beginning inventory, then calculate the total costs accounted for. (Abbreviation used; WIP = work in process. For amounts with a $0 balance, make sure to enter "O" in the appropriate cell.) Total Direct Conversion Production Costs Materials Costs Completed and transferred out: Work in process, beginning $ 1,248,000 $ 241.650 1,489,650 $ 231,000 0 231.000 Costs added to beginning WIP in current period Total from beginning inventory 1.720.650 6.842.000 Started and completed 4,532,000 2,310,000 Total costs of units completed and transferred out 8.562.650 137,125 Work in process, ending 103,000 34,125 8.609.775 5,883,000 2.816.775 Total costs accounted for Requirement 4. Explain any difference between the cost per equivalent unit in the assembly department under the weighted-average method and the FIFO method. The cost per equivalent unit differs between the two methods because each method uses different costs as the numerator of the calculation. The FIFO method uses only the costs added during the current period weighted-average method uses costs from the beginning work-in-process as well as costs added during the current period. Both methods use different equivalent units in the denominator. and the Requirement 5. Should Hoffman's managers choose the weighted average method or the FIFO method? Explain briefly. Begin by completing the table below that summarizes the costs assigned units completed and those still in process under the weighted average and FIFO process-costing methods. Weighted average FIFO Difference Cost of units completed and transferred out Work in process, ending Total costs accounted for
