Theprocess-costing system at Fielding Company has a singledirect-cost category(direct materials) and a singleindirect-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 carseat, it is immediately transferred to testing. Fielding Company uses the FIFO method of process costing.

Physical Units

Direct

Conversion

(Car Seats)

Materials

Costs

Work inprocess, October1a

5,200

$1,432,600

$527,280

Started during October 2017

19,000

Completed during October 2017

21,500

Work inprocess, October31b

2,700

Total costs added during October 2017

$4,085,000

$2,028,000

aDegree ofcompletion: directmaterials, ?%; conversioncosts, 65%.

bDegree ofcompletion: directmaterials, ?%; conversioncosts, 80%.

Direct

Conversion

Materials

Costs

Costs incurred to date

$

5,517,600

$

2,555,280

Divide by equivalent units of work done to date

24,200

23,660

Cost per equivalent unit for work done to date

$

228

$

108

Total

Direct

Conversion

Production Costs

Materials

Costs

Completed and transferred out

$

7,224,000

$

4,902,000

$

2,322,000

Work in process, ending

848,880

615,600

233,280

Total costs accounted for

$

8,072,880

$

5,517,600

$

2,555,280

Requirement 1. For each costcategory, compute equivalent units in the assembly department. Show physical units in the first column of your schedule. (For amounts with a 0balance, make sure to enter"0" in the appropriatecell.)

Equivalent Units

Physical

Direct

Conversion

Flow of Production

Units

Materials

Costs

Work in process beginning

Started during current period

To account for

Completed and transferred out during current period:

From beginning work in process

Started and completed

Work in process, ending

Accounted for

Equivalent units of work done in current period only

Requirement 2. For each costcategory, 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

Total costs to account for

Next calculate cost per equivalent unit for direct materials and conversion costs.

Direct

Conversion

Materials

Costs

Divide by

Cost per equivalent unit for work done in current period

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 beginninginventory, then calculate the total costs accounted for. (Abbreviation used; WIP= work in process. For amounts with a$0 balance, make sure to enter"0" in the appropriatecell.)

Total

Direct

Conversion

Production Costs

Materials

Costs

Completed and transferred out:

Total from beginning inventory

Total costs of units completed and transferred out

Total costs accounted for

Requirement 4. Explain any difference between the cost per equivalent unit in the assembly department under theweighted-average method and the FIFO method.

The cost per equivalent unit

differs

is the same

between the two methods because each method uses

different

the same

costs as the numerator of the calculation. The FIFO method uses

costs from the beginning work-in-process as well as costs added during the current period

only the beginning work-in-process costs

only the costs added during the current period

and theweighted-average method uses

costs from the beginning work-in-process as well as costs added during the current period.

only the beginning work-in-process costs.

only the costs added during the current period.

Both methods use

different

the same

equivalent units in the denominator.

Requirement 5. Should Fielding's managers choose theweighted-average method or the FIFOmethod? Explain briefly.

Begin by completing the table below that summarizes the costs assigned to units completed and those still in process under theweighted-average and FIFOprocess-costing methods.

Weighted-average

FIFO

Difference

Cost of units completed and transferred out

Work in process, ending

Total costs accounted for

Fielding's managers should consider the

FIFO

weighted-average

method because even though it shows

lower

higher

operating income and

lower

higher

cost of goodssold, it

lower

higher

taxes. Managers may have anincentive, however, to use the

FIFO

weighted-average

method and show higher income if themanagers' compensation increases with

lower

higher

operating income or if there are debt covenants that would be violated by showing

lower

higher

income. Another advantage of the FIFO method is that it provides better information for managing the business because it keeps

separate the costs of the current period from costs incurred in previous periods.

smootsh the cost per equivalent unit.