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Hiebert Chocolate, Ltd Production Reports

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Cost Production Report

The following data for the Packaging Department for March are available:
Units: Packaging Department
Beginning WIP-Units 10,000
Started in production 80,000
Transferred out 75,000
Ending WIP Units- 15,000
Beginning WIP- % complete 40%
Ending WIP- % complete 80%
Costs:
Beginning WIP- transferred in costs $3,000
Beginning WIP- materials costs ---
Beginning WIP-Conversion costs $1,630
Transferred-in costs $9,600
Direct materials- Packaging $21,000

Conversion costs:
Direct labor $ 8,470
Manufacturing overhead $ 7,300
Total conversion costs $15,770

Ben Hiebert, president of Hiebert Chocolate, Ltd, is trying to determine whether to use a weighted-average or FIFO product costing system, since Hiebert's contract with Wal-Mart allows for a sales price of cost per department + 15%.
Requirements
1. Consider only the Packaging Department data. Prepare cost of production reports using both weighted-average and FIFO process costing.
2. Which method should Heibert use and why?

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Solution Summary

The solution is provided in excel format using cell references to show calculations. The solution shows, step-by-step, how to calculate the equivalent units as well as costs assigned to such units under both the weighted average and FIFO methods.

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  • BA, Ain Shams University, Cairo Egypt
  • MBA, California State University, Sacramento
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