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Using the FIFO Method: Hoffman Company manufactures car seats in its Boise plant. Each car seat passes through the assembly department and the testing department.

Using the FIFO Method: 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.

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 seats, it is immediately transferred to testing.

Physical Units

Direct

Conversion

(Car Seats)

Materials

Costs

Work in process, Oct 1 *a

4,000

$1,248,000

$241,650

Started during Oct 2017

22,500

Complete during Oct 2017

26,000

Work in process, Oct 31 *b

500

Total costs added during Oct 2017

$4,635,000

$2,575,125

*a - Degree of completion: direct materials,?%; conversion costs, 45%.

*b - Degree of completion: direct materials,?%; conversion costs, 65%.

1. For each cost category, compute equivalent units in the assembly department. Show physical units in the first column of your schedule.

2. What issues should the manager focus on when reviewing the equivalent-unit calculations?

3. For each cost category, summarize total assembly department costs for October 2017 and calculate the cost per equivalent unit.

4. Assign costs to units completed and transferred out and to units in ending work in process.

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