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 seat, it is immediately transferred to testing. Hoffman Company uses the weighted-average method of process costing. Data for the assembly department for October 2017 are as follows:
Physical Units (Car Seats) Direct Materials Conversion Costs
Work in process, October 1a 4000 $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
Using the FIFO method of process costing. Explain any difference between the cost per equivalent unit in the assembly department under the weighted-average method and the FIFO method.
Required:
Should Hoffmanâs managers choose the weighted-average method or the FIFO method? Explain briefly.
Answers: 3
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Hoffman Company manufactures car seats in its Boise plant. Each car seat passes through the assembly...
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