Question

Company manufactures car seats in its 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 FIFO method of process costing.

	Physical Units	Direct	Conversion
	(Car Seats)	Materials	Costs

Work in​ process, October 1a	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

aDegree of​ completion: direct​ materials, ?%; conversion​ costs, 45​%.

bDegree of​ completion: direct​ materials, ?%; conversion​ costs, 65​%.

	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
Cost per equivalent unit for work done to date		$222	$107

		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
Total costs accounted for		$8,699,775	$5,883,000	$2,816,775

Answer 1

Production cost report(FIFO)
For the Month of
a) Input/Output reconciliation
Units be accounted for	Physical units
Units in beginning WIP Inventory	4,000
Units started/transferred in during the period	22,500
Total units be accounted for	26,500
Transferred out from Beginning Inventory	4,000
Units started and completed during the period	22,000
Normal loss	-
Abnormal loss	-
Units in ending WIP Inventory	500
Total units accounted for	26,500
b) Cost of input
Particulars	Material	Conversion Cost	Total
Cost in beginning WIP Inventory	$    12,48,000.00	$         2,41,650.00	$     14,89,650.00
Cost incurred during the period	$    46,35,000.00	$       25,75,125.00	$     72,10,125.00
Total	$    58,83,000.00	$       28,16,775.00	$    86,99,775.00
c) Equivalent units of Production- FIFO
	Material	Conversion Cost
Units in beginning WIP (A)	4000	4000
% of completion of beginning WIP in previous period (B)	100%	45%
% of beginning WIP completed this period [C=100%-B]	0%	55%
Equivalent units in beginning WIP [D=A×C]	-	2,200
Units both started and completed in current period (E)	22,000	22000
Units of ending WIP (F)	500	500
Percentage of completion of ending WIP (G)	100%	65%
Equivalent units in ending WIP (H=F×G)	500	325.0
Units of Abnormal loss (I)	-	0
Percentage of completion of Abnormal loss (J)	100%	100%
Equivalent units Abnormal loss (K=I×J)	-	-
Total equivalent units (D+E+H+K)	22,500	24,525
d) Cost per Equivalent Unit of Production-FIFO
	Material	Conversion Cost	Total
Cost be accounted for (a)	$    46,35,000.00	$       25,75,125.00	$     72,10,125.00
Total Equivalent unit be accounted for (b)	22,500	24,525.0
Cost per Equivalent Unit (a/b)	$               206.00	$                  105.00	$                311.00
e)Assignment of Cost to the Units transferred out , Units in ending WIP and Abnormal loss-FIFO
	Material	Conversion Cost	Total
Cost in beginning WIP Inventory (A)	$          12,48,000	$               2,41,650	$           14,89,650
Transferred in cost for opening WIP (B)= {Cost per Equivalent unit* Equivalent unit}	$                        -	$               2,31,000	$             2,31,000
Beginning Inventory ©=A+B	$         12,48,000	$               4,72,650	$          17,20,650
Cost assigned to the units transferred out (D)= {Cost per Equivalent unit* Equivalent unit}	$         45,32,000	$            23,10,000	$          68,42,000
Cost assigned the to ending WIP Inventory (E)= {Cost per Equivalent unit* Equivalent unit}	$            1,03,000	$                  34,125	$            1,37,125
Cost assigned to the Abnormal loss unit (F)= {Cost per Equivalent unit* Equivalent unit}	$                        -	$                           -	$                         -
Total Cost accounted for			$          86,99,775
Summery of Cost be accounted for and Accounted for as-FIFO
Cost be accounted for		Accounted for as
Cost in beginning WIP Inventory	$          14,89,650	Cost transferred Out
		Beginning	$           17,20,650
Cost Added		Started & Completed	$           68,42,000
Material	$          46,35,000	Closing WIP	$             1,37,125
Conversion Cost	$          25,75,125	Abnormal loss	$                         -
Total	$         86,99,775	Total	$          86,99,775